on absolute returns ( such as hedge fund managers and insurance companies ) to invest in more risky assets. it may also make it more profitable to engage in carry trades and create currency or maturity mismatches. on the unintended side, the success in achieving macro stability may change the perception of agents about the riskiness of the environment and lead them to take more risky bets in the expectation that good times will continue indefinitely ( or at least until the bet pays off ). also, the way to deal with bubbles in monetary policy in the us, applying the so - called greenspanput ( blinder and reis, 2005 ), may have increased the chance of bubble formation ( de gregorio, 2011 ). on the other hand, micro and macro prudential regulatory tools, such as caps on credit growth or capital requirements have direct consequences on the cost and availability of credit, with the corresponding impact on investment, consumption, employment, and output, and the transmission channels of monetary policy. however, the links between macro and financial stability as goals, as well as in the cross impact of their main tools, do not mean that they can be dealt with using a single type of instruments. while, as highlighted above, interest rate movements affect credit and asset prices, they are not the most appropriate for addressing financial stability concerns. for instance, raising the interest rate could in principle tame stock - or house - price growth in a closed economy, helping to prevent the formation of bubbles or bursting them at an early stage, before they threaten financial stability. but even if it were possible to identify a bubble from a fundamental - driven asset price increase, controlling asset price growth may require substantial increases in the interest rate, which will reduce credit supply and the prices of other assets that may or may not be part of the bubble, having negative consequences on output and inflation. in other words, the impact of such policy would be felt across the board in financial markets, on top of the detrimental impact it would have in the real economy by unnecessarily depressing output, employment and real investment. in an open economy, such policy may be ineffective in controlling asset price growth and may even worsen the prospects for financial stability. i will tackle this further in my coming discussion of capital flows. the same criticism applies to the use of regulation to achieve macro stability. it could be possible to use bank capital requirements to control inflation through the supply of credit and real activity, but it would raise the cost

this is not the strategy ’ s only feature. also for the first time ever, we have changed the philosophy of our relationship with individuals and institutions as clients with which we interact and for which we work every day. paraphrasing what president kennedy said in his inauguration speech over 60 years ago, i would say, “ ask not what your stakeholders can do for your central bank – ask what your central bank can do for its stakeholders. ” 1 / 3 bis central bankers'speeches the need to be client - oriented sets a new and, let ’ s be frank, a high bar for the ability of central banks to build and maintain dialogue. it goes without saying that central banks use communications as an important policy tool. but it is important to remember that transparency must be effective. it must help central bank pursue its mandate, which consists in ensuring price and financial stability. during these two days, we will discuss this aspect of central bank transparency on more than one occasion. but it ’ s time for us to admit that this passive, one - way communication, when central banks used to make everybody listen with bated breath to whatever scanty and vague words they had to offer, no longer works. ultimately, this approach undermines the effectiveness of central bank policy. “ if you don ’ t understand us, it ’ s your problem ” is the rhetoric that is outdated and obsolete. today, if you – our clients – have difficulty understanding us, it ’ s our problem. institutions that make themselves heard and understood are the only ones that get public trust. institutions that have public trust are the only ones that receive support and commitment. institutions that have public support are the only ones that can withstand the pressure of populism, fake news, manipulations, and attempts to turn these institutions into instruments for certain business interests that run counter to the interests of the people. under these circumstances, the central bank should transform taking the corporate sector as an example and begin to finally listen to clients and seek two - way communication. when communicating with clients, the central bank should take an individual approach to every client, choosing words that are intelligible and important and ones that interest the client. at the same time, the central bank must choose communication platforms that are suitable for every party. long story short, the need to be client - oriented compels banks to transition to targeted communications. we at the nbu have been moving in that direction for five years running. the groundwork for greater transparency