netherlands was the first country to adopt this policy, and duisenberg had already defended it strongly when he was minister of finance ( 73 - 77 ). during duisenberg's entire presidency, the netherlands was a participant in the erm, the exchange rate mechanism of the european union, that had started in 1979. throughout the first turbulent phase of the erm, until 1983, the guilder remained the strongest currency in the erm. in 1983 the guilder was devalued for the second time, and last time ever. the devaluation in 1983 was against the advice of duisenberg, and for years the loss of confidence by the financial markets was felt through higher interest rates. in the end, this episode strengthened duisenberg in his resolve to defend the exchange rate, even if significant interest hikes were required. by acting like that, duisenberg quickly restored credibility in the markets, and in the course of that proved that credibility is achieved by action, not by words. still, politicians were not always convinced that the exchange rate had priority over the interest rate. in 1992, for example, another minister of finance ( kok, in 1992 ) indicated that an interest rate increase was undesirable. duisenberg took the unusual step not to follow germany in raising the headline rate, but instead raised a less important rate ( beleningsrente ). it was accompanied by a press communique, indicating the bank's dedication to fight inflation through a strong guilder. this illustrated duisenberg's ability to avoid a public conflict about interest rates, a conflict that certainly had negatively affected the exchange rate. a major test of the erm and the dutch exchange rate policy, came in 1992 and 93, when speculative attacks caused several crises. in this phase the guilder - dm rate was the only exchange rate that was not under attack. the guilder - dm peg appeared to be the most credible and tightest bilateral exchange rate within the erm. looking back, this can only be explained by the credibility of dutch exchange rate policy in the previous years. the process towards economic and monetary union, which started in the 1970s, was in full progress during duisenberg's presidency. in the 1980s capital markets gradually became less restricted, culminating in 1990, with the start of stage i of the emu. on many occasions, duisenberg explained that free capital flows were in the interest of the netherlands. as

virus outbreak on medium - term inflation therefore also remain unclear. finally, how the corona crisis will affect longer - run underlying trends in the global economy is even more uncertain than the challenges in the preservation and recovery phase. yet, experiences from recent decades teach us that secular trends - such as globalisation - can have a substantial impact on both inflation and the wider economy. this is something central banks will need to adapt to in pursuit of their mandates. it is also something the ecb might take on board in its – postponed – strategy review. let me summarise. we are confronted with an unprecedented degree of uncertainty with respect to the economic impact of the coronavirus crisis. many challenges will unfold on the road to a new normal, which itself is still distant and undefined. at the same time, it is clear that central banks within their mandates stand ready to play their part in mitigating the adverse economic consequences of this global crisis. thank you for your attention. fout! onbekende naam voor documenteigenschap.