outside the eurozone, due to potential fx risks on bank ’ s balance sheets. a flexible exchange rate can be both part of the problem and the solution. capital controls in some form are here to stay as part of the toolbox, but comprehensive capital controls should not be imposed lightly. there are limits to independent monetary policy in small, open, and financially integrated economies, even if the exchange rate is flexible. let me finish here and i look forward to your questions. bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches

birgir isleifur gunnarsson : monetary policy, economic growth and prosperity opening address by mr birgir isleifur gunnarsson, chairman of the board of governors of the central bank of iceland, at a conference to mark the 60th anniversary of the university of iceland faculty of economics and business administration, reykjavik, 31 october 2001. * * * i would like to congratulate the university of iceland ’ s faculty of economics and business administration on its 60th anniversary, its noteworthy activities and its contributions towards strengthening the icelandic economy. i also wish the faculty every success for the future. at the same time i thank you for the honour i have been shown with this invitation to deliver the opening address at this anniversary conference. i have chosen to call my talk “ monetary policy, economic growth and prosperity. ” i shall therefore focus on the role played by monetary policy in economic policy implementation, and its contribution towards economic growth and prosperity. and there is ample reason as well, because the most notable events in economic organisation this year have involved precisely the monetary policy framework and the central bank. price stability important changes have been made to central bank legislation around the world in recent years. there has been a gradual increase in support for the view that it is natural to set central banks straightforward targets which are suited to the instruments they use, and to strengthen their independence to take action and their financial independence while at the same time making firm requirements about transparency and accountability towards the government and general public. treasury access to central bank funding was closed. simple target - setting for central banks largely involved assigning a single main objective to monetary policy, i. e. to promote price stability, which means a low level of measured inflation. in some countries, central banks were assigned the task of defining their own main objectives, but elsewhere this was done by governments, or in cooperation between the government and the central bank. these viewpoints are reflected in central bank legislation of many countries and in the maastricht treaty ’ s provisions for the establishment and activities of the european central bank. another widespread central bank objective in recent years has been to contribute to the stability of the financial system, including payments systems. many central banks have been devoting increasingly more scope to this topic, reflecting the need which has been identified following the deregulation of international capital movements. at global level, a much higher profile has been given to active monitoring of financial activities and maintaining an active overview of various risk factors in financial systems and the economy as