of implementing structural reforms in europe. the most relevant proposal of the liikanen report is to separate into a distinct legal entity risky trading activities of banks where such activities are significant. however, the two entities – the retail bank and the trading bank – may form part of the same banking group, hence preserving the universal banking model. i believe that this proposal is well oriented, as it addresses an issue that is not tackled by the current regulation, although its effectiveness will depend on the details of its implementation. there might be scope for improving or further specifying some technical aspects of the proposal. for instance, a distinction should be introduced between “ proprietary trading ” and “ market making ” in line, by the way, with the draft banking sector reform that is being currently discussed in france. concluding remarks ladies and gentlemen, let me conclude. central banks have played a crucial role in the economic and political response to the financial crisis of 2007 / 2008. their use of new and non - conventional tools was decisive to control the financial deterioration and economic contraction that the world was confronting at the beginning of 2009. in so doing, central banks have moved away, to a certain extent, from the old monetary policy model. it might be said that a new one is emerging where central banks will use two sets of policies – monetary and macroprudential policies – to ensure a broadly defined financial stability objective. thank you very much for your attention. bis central bankers ’ speeches

luis m linde : the changing role of central banks speech by mr luis m linde, governor of the bank of spain, at the 4th future of banking summit, organised by economist conferences, paris, 26 february 2013. * * * ladies and gentlemen, it is an honour, and a pleasure, to address such a distinguished audience as is gathering today in this conference. i would like to thank the economist for giving me the opportunity to analyse some of the changes affecting central banks policies. i will organize my talk around the two main areas of central banking : monetary policy and banking regulation. firstly, i will address the changing role of central banks in monetary policy, before the crisis and after the crisis. up until august 2007 – before the global financial crisis –, the general mood prevailing among academics and policymakers was that there existed a well - defined, so to say, “ science or model of monetary policy ”. there was a kind of consensus among central bankers about most elements of monetary policy strategy ; and monetary policy was perceived as being highly successful in developed countries, with low inflation and low variability of inflation and output. according to this consensus, macroeconomic stability was achieved through rule - based monetary policy, delegated to an independent central bank with an implicit or explicit inflation target and with very little role for discretionary fiscal policy. conducting monetary policy was considered to be relatively straightforward : the central bank controlled the short - term interest rate with effects on the real economy, mainly through three channels : long - term interest rates, inflation expectations and asset prices. the credit channel of monetary policy was deemed weak ; and the banking sector was ignored by most macroeconomic models used in central banks : banks were believed to work well and most market failures were attributed to product and factor markets. financial markets were assumed to be efficient at distributing and pricing risk. financial innovation was welcomed as it promoted gains in efficiency and welfare, leaving a reduced role for central banks on this area. one of the main implications of this consensus was that price stability was considered to be sufficient for macroeconomic stability. this led most central banks to limit themselves to a predominantly micro - prudential approach to regulation and supervision, focused mainly on the soundness of individual institutions. there was a certain neglect of the importance of the stability of the system as a whole. after the crisis in 2007, and especially after september 2008, the world was hit by a global financial crisis which not only produced the most severe worldwide economic contraction since the great depression