’ s right, the questions for monetary policy makers become harder : namely, when, where and by how much will productivity growth eventually pick up? what ’ s the likely impact on potential supply? as it happens the projections in the february inflation report do project a pick up in supply over the next few years, but that reflects improved labour availability rather an assumption that there is an ict led productivity miracle in the making. but we could easily be wrong. given recent experience, there is clearly some risk of undue pessimism, though it has to be said that past policy errors have more often been the result of too much optimism. one thing is for sure : we can ’ t afford to sit back and wait for the data to tell us the answer. by the time we have that degree of certainty policy will have moved on. so productivity will remain a key issue for us over the coming years. conclusion which brings me to my final challenge for policy makers : how to handle uncertainty in taking and presenting policy decisions. the mpc has met this challenge head on from the beginning. within the discipline imposed by a shared inflation target, the committee has been very open both about uncertainty and about the disagreement that is likely to go with it. published mpc forecasts have explored rather than glossed over risks and uncertainties. the individual accountability of mpc members reduces the incentive to search for consensus. mpc members have always voiced their different views in public, and while this basu, s, fernald, j g, oulton, n, and srinivasan, s ( 2003 ), ‘ the case of missing productivity growth : or, does information technology explain why productivity accelerated in the united states but not the united kingdom? ’, forthcoming in gertler, m and rogoff, k ( eds ) nber macroeconomic annual 2003, mit press. available from the nber website : www. nber. org. is not without risk to the clarity of the message, and has occasionally led to an uncomfortable personalising of decisions, i see it as an inherent part of system not a quirk of particular personalities. the big prize is long term credibility, and nowadays there is no credibility without openness. this is what gives the present framework the flexibility to respond to changing circumstances, and allows members of the mpc to change their minds in the light of experience. and in an uncertain world this openness to learning is a precondition for success under any

private notes which served as currency, and they often had a monopoly over such note issue. ” 8 money is a symbol of stability and central banks play an important role in maintaining this stability. it may be obvious but it ’ s worth saying : the stability of money plays a critical role in the stability of society. the role of money ( as a store of value, a unit of account and a medium of exchange ) is also an important instrument in how we connect with each other, through trade, commerce, and our everyday interactions and hence in building social capital. in more recent history, the later wave of central banks were established at the turn of the 20th century and brought together the many instruments that people were using for currency and to provide financial stability. 9 while central banks at this time were constrained by the gold standard, they “ learned to act as lenders of last resort in times of financial stress — when events like bad harvests, defaults by railroads, or wars precipitated a scramble for liquidity ( in which depositors ran to their banks and tried to convert their deposits into cash ). ” 10 as we chart the history of central banks, we can see their critical role providing stability, both monetary and financial. i will discuss considerations beyond monetary and financial stability later in my remarks. one point i would like to reiterate now is who central banks serve. this is an important anchor when thinking about the role of central banks in building ( or rebuilding ) social capital. since becoming governor of the central bank of ireland, a guiding principle for me has been a phrase from the original legislation establishing the central bank of ireland in 1942. echoing the state ’ s constitution, it stated that the central bank ’ s “ constant and predominant aim shall be the welfare of the people as a whole ”. 11 but i will return to that later. institutions matter taking a step back, if social capital is ultimately about how we connect with one another, it ’ s clear that institutions matter for building social capital. and central banks, as important institutions of the state, play a critical role. in fact, i suggest that central banks are part of an institutional ecosystem that is interconnected, notwithstanding that the individual components may act independently. we do not act in a vacuum, and we should not confuse independence with isolation. douglass north defined institutions as the “ humanly devised constraints that structure political, economic and social interactions ”. 12 economists from adam smith, to ronald coase, man