the organisers for this invitation to participate in the annual conference of the marshall society. it is a pleasure to be here and support the marshall society ’ s quest to further young economists ’ interest in economics. the subject of this year ’ s conference is ambitiously on the power of policy to solve problems and shape the future. in modern times, monetary policy is usually considered the most powerful of the macro policies to stabilise the economy. it was not always assessed like that and it is important to be aware of its limitations. for instance, it is sometimes said that the world avoided the worst in 2008, only because central banks made bold use of their tools, cutting rates and providing abundant liquidity. the truth is that without the significant use of fiscal policy in 2008 and 2009 stimulating our economies and supporting the banking sector, the meltdown of the financial system could not have been avoided. at their meeting in toronto in 2010, the g20 bis central bankers ’ speeches decided to reverse the policy and embarked in fiscal consolidation, to different degrees, leaving monetary policy to deal with macroeconomic stabilisation. in this context, it is easier to explain by fiscal policy short - term effects, the double dip suffered by the euro area economy after 2011, than by the behaviour of monetary policy. the tasks for monetary policy became particularly challenging in the euro area, in view of the imbalances built prior to the crisis by private debt expansion and the subsequent sovereign debt crisis of 2010 – 2012. 1 the resulting financial fragmentation made the proper transmission of monetary policy more difficult. the first part of my remarks today will be dedicated to briefly review the experience of the past seven years in order to illustrate two broad features of the governing council ’ s response to the evolving phases of the crisis. the first feature is naturally that all ecb actions have always been guided by the compliance with its mandate, which is to maintain price stability as a primary objective as i will clarify below. the second feature is that, in the pursuit of its objectives, the ecb has been very flexible in adjusting and expanding its toolkit. flexibility has been an important principle to ensure that economic and financial shocks would be met by the most efficient response at any point in time. without going into the details of the individual instruments that we have operated, i will identify two broad phases in our response to the crisis. the two phases are characterised by different uses of our balance sheet as an instrument of monetary policy. this will lead me to comment on

david dodge : international financial architecture and the resolution of financial crises speech by mr david dodge, governor of the bank of canada, to the canadian club of ottawa and the canadian institute of international affairs, ottawa, ontario, 14 may 2002. * * * i am pleased to be here today to talk about the bank of canada's contribution to international financial stability and the resolution of financial crises. the preamble to the bank of canada act calls on us to promote the economic and financial welfare of canada. in this context, we aim to foster good economic performance through monetary stability — that is to say, through low, stable, and predictable inflation. but no market economy can function properly unless it is also supported by an efficient and stable financial system. sound financial institutions, a robust infrastructure, and well - functioning financial markets are necessary to facilitate transactions and to properly channel savings into investments. this is true for canada's domestic economy. but in today's interconnected world, it is equally true for the global economy. recent experience has shown that world events can have serious repercussions on national financial markets, including ours, and indeed on our entire economy. the mexican crisis of 1994 – 95 and the asian and russian crises of 1997 – 98 are cases in point. in both instances, canada was sideswiped. and while the recent acute economic and social problems in argentina have not had a major economic impact beyond that country's borders, they have nevertheless had implications for canadian banks operating in, or holding claims on, argentina. so canadians have more than a passing interest in a healthy global financial environment. sound macroeconomic policies and sound financial systems across all countries are becoming even more important as the world becomes more and more integrated. the episodes of financial stress that the world has experienced in recent years have revealed weaknesses in the foundation of the international financial architecture. those problems have to be addressed, and the foundation fortified, if we want to reduce the incidence and the impact of global financial disturbances. in the aftermath of the crises of the late 1990s, the international community has acted to identify and to begin to deal with financial vulnerabilities. canadians have been actively involved in this work. and we at the bank of canada have played our part. the bank participates in several international forums where issues of financial stability are being debated. and we work closely with others to strengthen the international financial architecture by developing frameworks for the prevention, management, and resolution of crises. today, i would like