might also be an increasing politicisation of the exchange rate. so far, the international monetary system has come through the crisis without competitive devaluations and i hope very much that things stay like that. now, in japan of all places there may be more obvious problems than inflation and a weak currency. it is not without good reason, however, that central banks have been given independence and a narrow mandate. this was a lesson of the 1970s and early 1980s – a time when many countries had high inflation rates, sometimes in double digits. in the united states, this era is called the “ great inflation ”, which was followed in the mid1980s by the “ great moderation ”, a period of moderate inflation rates and dampened economic cycles. and, then, along with the “ great financial crisis ” came the “ great recession ”. “ great ” is a famously popular, not to say overused adjective on the other side of the atlantic. the experience of the great inflation was, in any event, that independent central banks with a narrow, credible mandate enjoyed greater success in combating inflation. as a result, many central banks worldwide were given independence in the 1980s and 1990s. when the bank of england was granted independence in 1997, gordon brown, then chancellor of the exchequer, said “ the previous arrangements for monetary policy were too short - termist, encouraging short but unsustainable booms and higher inflation, followed inevitably by recession. ” the depoliticisation of money and central banks ’ stability orientation undoubtedly made a key contribution to the great moderation. the decline in inflation during this period was, admittedly, also assisted by other developments, such as globalisation. to that extent, the great moderation can be seen as halcyon days for monetary policy. since the outbreak of the crisis, the environment has become noticeably less favourable for central bankers. the growing demand for energy and raw materials on the part of the up - and - coming economies has tended to make the inflation - dampening impact of globalisation flip over into rising pressure on prices. in the wake of the financial, economic and sovereign debt crisis, central banks are being urged to take measures to support the financial system, stimulate economic activity, reduce government funding costs and even safeguard government solvency. overburdening central banks with tasks and expectations, however, is certainly not the right way to achieve a lasting solution to the crisis. the central banks, in turn, will best protect

their independence by adopting a narrow interpretation of their mandate. in summary, it can be said that “ today most central banks are independent, headed by nonelected officials, and quite powerful. this set - up is acceptable only if independence is limited by the mandate. that ’ s the framework the legislators have given us [ … ]. that is why we are so keen about respecting the mandate, because that ’ s the true guarantee of our independence, which [ … ] is crucial for our credibility. and credibility is essential for delivering price stability. ” those words are not mine, by the way, but come from a recent interview with mario draghi, who put the point most succinctly. bis central bankers ’ speeches 6. what matters now the key to resolving the crisis therefore does not lie with the central banks. rather, permanently overcoming the crisis will now be a matter of rapidly implementing the regulatory reforms that have already been agreed in principle – above all basel iii – and governments implementing budget consolidation and the necessary structural reforms in a controlled, creative but consistent manner – and not just in europe. similarly, it will be important to put in place a coherent framework for the monetary union – a framework in which, despite the communitisation of risks, liability and control are not thrown out of kilter – with everything based on the maastricht principles as long as there are no majorities for a genuine fiscal union. in this connection, too, the banking union should be designed in such a way that it really does become a primary pillar of a stability union. this year will probably not mark the end of the crisis. as i have already said, the processes of adjustment will take time. but decisive steps can be taken in 2013 to overcome the crisis on a lasting basis. of course, i said the same thing at the last annual opening with regard to 2012. still, that is not my own personal mantra, but rather a reminder that there is no more time to spare. those steps being now taken, however, would be good news for us all, not least for frankfurt as a financial centre and for deutsche borse. for all of us, i want to see these steps being implemented and, with that in mind, i wish you all the best in the new year. bis central bankers ’ speeches