dovish. that would represent a return to the first extreme incentivising borrowing. both these extremes have perverse effects. the impacts of the extreme policies and the parallel trends in the economy are assessed by duffie ( 2023 ) for the us financial market and, for example, by grimm, laeven and popov ( 2023 ) for the euro area. the impacts on global trade are summarised by alfaro and chor ( 2023 ). it would be inappropriate for me to evaluate the polices of other central banks, but it would be a mistake not to critique the past policy of the cnb. the main problem in the czech republic was the rapid switch from one extreme to the other – from ultra - low rates and efforts to trigger inflation to ultra - high rates and efforts to rein inflation back in again. everything comes at a cost. a rapid increase in rates doesn't always mean lower inflation in the future. you can't put right the mistakes made in past years in one fell swoop. this is discussed in the classical literature – see, for example, friedman and lucas ( 1976 ). the big lesson for me is that we will try not to repeat 2017 at the cnb. the interventions made at that time to weaken the koruna and raise inflation led within four months to an increase in the cnb's balance sheet, or rather in the banking sector's liquidity. it increased from czk 1, 300 billion in december 2016 to czk 2, 300 billion in 2 / 4 bis - central bankers'speeches april 2017. this contributed to us later having the highest core inflation in the eu. each central bank should start with itself, with self - reflection. my discussions with colleagues from the fed, the ecb, the bank of england and the reserve bank of new zealand confirmed me in the view that our models, should, like theirs, be audited and critically assessed. professor at the university of chicago and former governor of the reserve bank of india raghuram rajan ( rajan, 2023 ) said : " central banks have constrained their own policy space with asymmetric and unconventional policies, ostensibly intended to deal with the policy rate touching the lower bound. they have triggered a variety of imbalances that are making fighting inflation harder today. " more purposeful and less interventionist central banks would probably do better than a high - inflation, high - debt, low - growth world

mojmir hampl : financial strangulation? article by mr mojmir hampl, vice governor of the czech national bank and a member of the eu's economic and financial committee, published in the wall street journal, prague, 2 december 2008. * * * don't rush to change all the fire regulations while the actual fire is still raging. the reaction to the financial crisis should not be worse than the crisis itself. this is the mantra i've been repeating to myself – while shaking my head in disbelief at many ideas surfacing in the european and global debate on the " postcrisis " shape of the financial universe. the list of proposals that have appeared on the table so far is long and ranges from attempts to ban short - selling and regulate credit default swap markets to toughening up supervision of credit rating agencies, hedge funds or the whole sphere of structured financing. capping executive pay – the easiest target for anyone searching for cheap political capital – is of course included. so are state efforts to micromanage banks, such as french attempts to set numerical targets for lending by recapitalized banks. for many people, these measures are the tolerable or even necessary by - products of fixing the crisis. at the top of the list, then, looms a concept of a brand - new, omnipotent, global ( or at least european ) super - regulator that would undoubtedly do everything better next time. in general, most of these ideas are heading in the same direction : toward greater regulation and centralization of the financial sector, and toward less competition and a greater publicsector presence in the financial industry from now on. these thoughts – often presented in soft " eurospeak " so as not to sound too alarming – seem as if their proponents thought them up long ago and were just waiting for a good opportunity to unveil them as miracle cures for all the financial world's ills and woes. it is as if we hadn't all known for years that unfortunately – in the world in general, and the financial one in particular – there are no such things as perfect rules, perfect regulation or, above all, perfect certainty. it is as if we'd forgotten that competition, rivalry, profit opportunities and staff motivation are not the spawn of the devil but do a lot of good. more important, the private part of the financial universe is being presented as a self - evident culprit of