they are clearly relevant today, as central banks are in search of the right balance between two risks. on one hand, easing monetary restrictions too early could cause inflation to remain persistently elevated and entrenched in price and wage setting run - ups. on the other hand, ending the restrictive stance too late ( or making it far " too strong " ) could lead to significant negative repercussions for economic activity and financial stability, resulting in medium - term excessive disinflation. as i have mentioned, monetary policy is not only affected by inequality but also affects it in various ways. for example, lowering interest rates reduces the debt burden and the returns on savings and may lead to higher asset prices. over time, it tends to spur economic activity and push up labour demand, as well as wages and consumer prices. depending on expectations and on the shape and position of a complex relation such as the phillips curve, it may lead to higher inflation. it is clear that, by taking any one of these channels in isolation, the effects of monetary policy look very uneven, as they would, for example, influence debtors in one direction and savers in the opposite one. since these mechanisms also work in reverse, this may explain why central banks are criticised both when they lower and when they raise interest rates. what is perhaps especially interesting for the discussion generated during this conference is that, both when monetary policy becomes more restrictive and when it becomes more expansionary, central banks always continue to claim that they do not contribute to increasing inequality! however, to a certain degree we may find that this claim is to some extent supported by literature. indeed, once all the channels mentioned above have been aggregated, losses and gains may appear more or less evenly distributed across households. at the bank of italy, for example, we have extensively analysed the consequences of the ecb's accommodative monetary policy in 2011 - 12, following the very dismal consequences of the euro area sovereign debt crisis. if anything, the expansionary stance during those years contributed to reducing income inequality in italy, mainly by supporting the employment and wages of low - income households. the response of households'net worth was, however, slightly u - shaped along the wealth distribution : richer households benefitted more than the average from the expansionary policy, thanks to their capital gains, but poorer households also enjoyed a larger advantage, 3 / 6 bis - central bankers'speeches due to their higher leverage. the

it was only when you called me to the basle committee that i fully realized how strong this soft approach could be. lawyers say that the basle committee “ does not legally exist ”. when i was appointed to its chair, my secretary had to take my word for it because she could not find any written evidence of the decision. yet the committee rules, once endorsed by you, are adopted by the markets, followed by national legislators and spread to all countries worldwide. when considering the working methods of the basle committee, i have often thought that international cooperation among central banks can be compared to italo calvino ’ s “ nonexistent knight ”. when charlemagne, reviewing his paladins before the battle against the infidels, reached the last knight, agilulf, clad entirely in white armour, the cavalier refused to show his face to the emperor. the explanation he gave was simple : “ sire, because i do not exist ”. charlemagne insisted and when the knight finally raised his visor, the helmet was empty. “ well, well! who ’ d have thought it! ” exclaimed charlemagne. “ and how do you do your job, then, if you don ’ t exist? ”. “ by will power and faith in our holy cause! ” said agilulf. he fought with valour and bravery. his special status assisted him in the accomplishment of his duty and indeed he proved to be one of the best paladins.