this result risks leading to large fluctuations in the real economy. critics of the federal reserve in the usa claim that when alan greenspan coined the phrase " irrational exuberance " in 1996, it was clear that prices on the stock exchange had risen too much and that this development should have been counteracted. nothing was done and the rise in share prices continued until march 2000. since then the stock exchanges have fallen, nasdaq by 70 per cent, and the fall on the stock exchange risks pulling the usa down into a recession that could have been avoided. however, comes the objection ; is it really possible to realise when a stock exchange has risen too much? the answer is that prices on the stock exchange must have some relation to the underlying development of productivity in trade and industry, to company profits and to the market's pricing of risks. of course, it is not possible to determine precisely when the stock market has risen too much or when it is undervalued. however, it should not be too difficult to detect obvious deviations. the problem is similar to the central banks'analyses of the output gap, which indicates whether there is an inflationary risk in the economy as a result of an excessively high level of activity or a risk of deflation. the output gap is calculated routinely by central banks around the world, and these calculations estimate the sizes that would be included in a calculation of over - valuation or under - valuation on the share markets. it can hardly be easier to calculate potential growth for the entire economy than the fundamental value of the stock market, according to critics of us monetary policy. it should be possible, at least in the case of major deviations from fundamental economic conditions, to detect imbalances on the asset markets, exaggerated valuations that could potentially give rise to monetary policy measures being necessary, even if the target for consumer prices is being followed fairly well. this is how the international discussion runs, caused by stock market developments, primarily those in the usa, with the current fears that the large downturn on the stock exchange will be followed by a deep recession. for a small, open economy like sweden's, the possibility of affecting share prices through monetary policy restraint should be limited. the swedish stock market is strongly correlated with that in the usa, partly because many of the companies listed on the swedish stock exchange are multinational. in principle, however, there is good reason for taking action if we assess that large financial imbalances are being

with the republic of turkey one could go back to the proclamation of the new state as a republic, last century, and even more, centuries of ties between the romanian principalities and the ottoman empire. i also like to notice the connection between our two central banks. in the national bank of romania ’ s archives there are letters, exchanged between governor mitita constantinescu and governor salahattin cam, regarding the organization of a conference for the governors of the central banks in the balkanic coalition, in november 1937, in ankara. now, both central banks are members of the club of governors of the black sea area. regarding sweden i will grasp your attention with a historical moment that incidentally connects sweden with bucharest and the ottoman empire. one of bucharest ’ s landmarks, the coltei tower ( part of the coltei hospital which you can see across the boulevard ) has been built in the early xviii century by the swedish soldiers, during king charles xii retreat to adrianople after his failed campaign in russia. bis central bankers ’ speeches i will end now my brief journey into history, which has not been nor exhaustive, not even relevant, and get back to our conference topic. during the debate one should not forget that the size of the economies and the development level is different in these three countries. for example in a list compiled by the international monetary fund for the year 2012, turkey ranks 17th, with a nominal gdp of 795 billion dollars, while sweden ranks 22th, with a nominal gdp of 525 billion dollars ( romania is 56th, with 170 billion dollars ). gdp / capita is also rather different. i do hope that this conference will elicit a lively debate. i believe that we have much to learn from the swedish and turkish experience since they have been market economies for a longer period of time compared to romania. i kindly invite their excellences the ambassadors of turkey and sweden to address the audience and to introduce their speakers. the debate will be moderated by mr. valentin lazea, the national bank of romania chief economist. thank you for attending this conference, which i do hope will turn out to be a very successful one. bis central bankers ’ speeches