olli rehn : globalization has not been cancelled – and its analysis is essential opening remarks by mr olli rehn, governor of the bank of finland, at bank of finland institute for emerging economies ’ ( bofit ) 30th anniversary conference, helsinki, 9 november 2021. * * * ladies and gentlemen, dear friends, today we are celebrating the 30th anniversary of the bank of finland institute for emerging economies, or bofit, as it is often known. the unit ’ s name has changed a few times over the years, but the commitment to rigorous analysis and research on large emerging market economies has been maintained throughout. in these opening remarks i will discuss the origins of bofit, as well as how this history reflects changes in the global economy and finland ’ s changing trade patterns. in the future, too, we shall need analysis of global phenomena – even more than we do today. it is not an exaggeration to say that three decades ago the geopolitical and economic tectonic plates were rapidly shifting in europe and elsewhere in the world. the disintegration of the soviet bloc had begun in 1989, and more and more countries were abandoning the centrally planned economic model. the berlin wall fell in november 1989. however, exactly thirty years ago the soviet union still existed. economic relations between the soviet union and finland were based on a barter trade arrangement : every year the value of goods exported from finland to the soviet union was supposed to match the value of goods imported from the soviet union to finland – more or less. based on the logic of the centrally planned soviet system, companies did not deal directly with each other. instead, the respective governments agreed on what was bought and sold, and at what price. more importantly, from the point of view of the anniversary conference today, payments flowed through the central banks of the two countries. hence, the bank of finland had a whole department handling payments to and from the soviet union, and also various economic risks arising from such payments. experts from this department also participated in successive rounds of trade negotiations. however, especially in the 1980s, there was a growing realization that the various reforms initiated in the soviet union could have far - reaching consequences for the whole soviet economy and society. economists of the bilateral trade department began to pay more and more attention to the soviet reforms and their effects. by 1990, if not earlier, it had become obvious that the soviet reforms and general economic disintegration had proceeded so far that

, china´s growth has been decelerating and europe has its own problems. as a consequence, most of the major central banks have had to put on hold their long - awaited monetary policy normalisation. this is the case for the ecb as well. against the backdrop of the current economic outlook, the ecb governing council is maintaining an ample degree of monetary accommodation through our forward guidance on the key ecb interest rates, reinvestments of a sizable stock of acquired assets, and the new series of targeted long - term refinancing operations. 1 / 4 bis central bankers'speeches moreover, the governing council stands ready to adjust all of its instruments, as appropriate, so that inflation converges with our aim of below but close to 2 % in a sustained manner. and as president draghi has said, the ecb´s inflation target is symmetrical : our inflation goal does not imply a ceiling at 2 %, since inflation can deviate from our target in both directions. the measures taken by the governing council reflect the council´s position that it is equally important to act effectively on inflation levels that are above or below the price stability objective. in addition to current cyclical headwinds, monetary policy - makers are faced with at least three longer - term developments that challenge their current monetary policy strategies. first, despite years of highly expansionary monetary policies, inflation has got stuck at a low level. the long - lasting low inflation may have reduced inflationary expectations on a longer - term basis. alternatively, market participants may have in general lost their faith in central banks´ ability to raise inflation closer to the target. second, related to low inflation, the equilibrium interest rate – or the so - called natural rate of interest – has declined to a historically low level. in the current low interest rate environment, the scope for conventional monetary policy easing is limited. the probability of hitting the zero lower bound might be elevated also in the longer term. third, the trade - off between economic activity and inflationary pressures seems to have loosened. in economic parlance, the phillips curve seems to have become flatter. if this is the case, the effect of monetary policy on inflation is now weaker than it used to be. and, needless to say, the forthcoming ecological and societal transformations caused by climate change, population aging and concerns about inequality need to be taken into account in all economic policy fronts, including monetary policy. i am convinced that central banks should thoroughly explore the potential impacts of