this is exactly what happened three years later after the failure of lehman brothers. next autumn will mark the passing of 10 years since that event. the response from many in the audience was very hostile. rajan was seen as a spoiler at the party and an opponent of innovation and progress. his proposals for reform were called ‘ nonstarters ’. at that time, the policy community was not in a mood to change course just because of one conference presentation, even if it was a balanced and well thought - out contribution. it took a major international disaster for the policy community and the majority of academic opinion to adjust its view. rajan ’ s speech was a great example of not only professional competence, but also of professional integrity and even courage. economics and climate change when we examine the major societal issues of our time that also have a strong impact on the economy, we cannot ignore climate change. climate change has been described as the largest global market failure, which is due to the fact 4 / 6 bis central bankers'speeches that a price has not been established for greenhouse gas emissions. the future of our climate is subject to a considerable degree of uncertainty, but in the scientific community there is broad consensus on the basic issues : climate change is a fact, it is accelerating and it is a humaninduced phenomenon. there are many unresolved and difficult issues in the area of climate policy, but in economics there is a fairly broad consensus on the principles for solving the problem. these principles are discussed also by jean tirole in his book ‘ economics for the common good ’. climate policy should be effective and equitable. the system should be constructed so that all countries have an incentive to participate in the combat against climate change. first, i will discuss the issue of effectiveness. climate change is a global problem that requires global solutions. one global price should be established for greenhouse gas emissions because the impact of greenhouse gas emissions on global warming is the same irrespective of where in the world or in which field of production they are created. various country -, region - or industry - specific unilateral solutions may have unwanted effects. for example, if a country introduces a stricter climate policy, it may provide companies an incentive for relocating greenhouse gas - emitting production to countries with a laxer climate policy. due to this phenomenon – known as carbon leakage – global greenhouse gas emissions would not necessarily decrease. on the other hand, as a result of subsidies on renewable

silver standard independently of the rouble. as the russian rouble remained inconvertible to silver, finland ’ s monetary system was thus effectively separated from russia ’ s. in 1868, the bank of finland was transferred under the control and ownership of the parliament. until then, the bank had been subordinated to the imperial senate of finland. the system in which the central bank belongs to the parliament was adopted following the swedish example and has lasted to this day. most european countries moved to the gold standard in the 1870s, and finland followed suit in 1878. at that point, the gold content of the finnish markka was defined so that it was exactly equivalent to the french franc ( as well as the belgian and swiss francs, and the italian lira ). finland thus became, by a unilateral decision, an effective member of the european franc zone ( the latin monetary union ), even if not a signatory to the monetary union agreement. the bank of finland managed to keep the exchange rate of the markka vis - a - vis the french franc constant for 36 years, from the start in 1878 until the outbreak of the first world war. finland declared her independence in december 1917, following the october revolution in russia. the first world war and the finnish civil war of 1918 caused sharp inflation. in bis central bankers ’ speeches 1923 the bank of finland finally manages to stabilize the value of the currency, and the markka had lost almost 90 per cent of its prewar value in gold. at this lower parity, the markka was returned to gold as of the beginning of 1926, following the british pound sterling. in the interwar years, the bank of finland became the undisputed leader of finland ’ s economic policy. this was largely due to the very strong governor of the bank, risto ryti, who acquired considerable prestige in finland and also abroad. ever since ryti ’ s governorship, which lasted from 1924 until the outbreak of the second world war, the governor of the bank of finland has been one of the most central figures in finnish public life. this is illustrated by the fact that four members of the board of the bank of finland have become presidents of the republic : kyosti kallio, risto ryti, urho kekkonen, and mauno koivisto. two of these, mr ryti and dr koivisto, had been governors of the bank. the great depression forced the