expanded their powers, communities have been left powerless in dealing with the consequences of technological change and globalisation. as a result, people turn towards populist politicians. their solutions, however, undermine the liberal market democratic system that has brought about prosperity. the appropriate solution to many of our problems consists of returning power from the state to the community. communities should be able to develop policies to address their own needs. this makes them less receptive to populist solutions. raghu ’ s view reminds me of the political system in switzerland. here, political decisions are taken at the lowest possible level of governance, closest to the people concerned. this decentralisation fosters citizens ’ engagement in their communities. today, raghu will speak about an issue that is more narrow in scope, but which is of great importance to central banks, not least to the swiss national bank. his speech is about the spillovers of monetary policy beyond a country ’ s border. this topic has attracted a lot of attention in the past few years following qe and other unconventional monetary policy measures adopted by central banks. who better to speak to us on this subject than raghu with his profound knowledge of capital markets and his experience as the central bank governor of a country highly exposed to monetary policy decisions taken elsewhere? ladies and gentlemen, please join me in welcoming raghuram rajan with a big round of applause. page 4 / 4

with taxpayers. the rescue of significant parts of the global financial system from nearcertain collapse by public authorities came at very substantial risk and costs to taxpayers. according to data collected by the bank for international settlements, here in the united states, for example, the total potential costs of various support measures taken – capital injections, asset purchases, and guarantees of bank debt – amount to about 40 per cent of gdp. for some european countries, these numbers are even higher. while in some cases governments and central banks have been able to reduce their exposures, sometimes even with a profit, the involvement of the public sector remains important. the ultimate outcomes of these involvements are uncertain. moreover, the consequences of the crisis in terms of job ben s. bernanke gave a thorough overview of the various measures taken worldwide in his speech “ reflections on a year of crisis ” at the federal reserve bank of kansas city ’ s annual economic symposium, jackson hole, on 21 august 2009. and wealth losses, huge increases in discretionary and non - discretionary public spending, and dramatic declines in public revenue is bound to be enormous. in some countries, public debt is set to rise at a pace never seen before in peace time. at the end, the citizens of our respective countries will have to foot the bill, one way or another. the second reason is that the crisis also generates important intangible costs which are often overlooked. confidence in the financial sector and those running it has been severely damaged. moreover, because a small number of individuals have dogmatically equated markets with the unbounded pursuit of short - term profits, faith in the benefits of a marketbased economic system has been undermined. finally, the extraordinary public policy response to the crisis has potentially prepared the ground for even more moral hazard in the future. the third reason is that this financial crisis will not be the last one. between 1973 and 1997 alone, there were 139 documented financial crises in various parts of the world. 2 some suggest that we should redesign the global financial system in such a way that there will never be a financial crisis again. this is neither desirable nor realistic. as long as we want a financial system that performs a meaningful and useful function for the real economy, we will have to live with financial cycles. moreover, the current crisis has clearly demonstrated the limitations of complex regulations and models. even the most complex models will never be infallible. what we can and should do is to limit