in which contracts can be enforced and property rights can be established. in all these areas, the cibs have made significant, albeit uneven, progress. but much more remains to be done. moreover, these preconditions for growth alone cannot guarantee growth in the longer term. in the longer run, a country's economic performance is increasingly determined by how well it can harness its human potential. therefore, a key challenge for the cibs will be to ensure that all people have a reasonable chance to fulfill their potential and aspirations. i emphasize here equality of opportunity. it implies that individuals are not excluded from education, health care or employment on the basis of immutable traits. equality of opportunity is about making the playing field more level, but it does not, and even should not, guarantee equality of outcome. the most pressing problems arising from inequality vary greatly between different cibscountries, but they are formidable in all of them. china has the widening gap between its booming cities and stagnant rural areas, india ’ s potential is constrained by the rigidity of the caste system, brazil suffers from very wide and deeply entrenched inequality, and south africa is yet to rid itself fully from the negative legacy of apartheid. these are extremely complex problems and their remedies will need to take into account many culture specific aspects. however, there seem to be some factors that have universal relevance. one such is the crucial importance of education as a means of ensuring better equality of opportunity and securing sustainable economic growth. equality in terms of gender, region, and social - economic background has been a longstanding guiding principle of finland's education system. compulsory basic education was one of the first reforms implemented after finland became independent 90 years ago. in the 1970s, implementation of the comprehensive school, together with other reforms, further improved equality in opportunity to pursue education. educated labor force is a pre - requisite for innovation and to the capacity to absorb new technology, and thereby it fosters economic growth. this shows that – even in the face of globalization – an economic model that emphasizes equal access to education, can be a source of strength rather than an impediment to economic growth. i would also like to make a couple of remarks about growth and trade from a central banker's perspective. the increased role of the emes in global growth and trade pose interesting challenges for central bankers. in particular, the increasing weight of the emes in world trade has been changing the domestic

inflation process in the advanced economies, including in the euro area. it has contributed to a lower worldwide inflation rates in recent years. the questions of how big this dampening effect has been, and whether it will persist going forward, are among the most important and hotly debated questions in central banking. international finance next, i would like to discuss briefly another main theme of the conference, that of international finance. first, i want to acknowledge upfront that the causal link between financial integration and growth is far from being straightforward. however, it seems irrefutable that better allocation of global resources allowed by deepening financial integration has been an important factor in supporting global growth. the role of the emes has increased in international finance. many emes have also made great strides in developing their domestic financial markets, but much remains to be done. here i want to underscore the need to proceed with caution. this is because capital market liberalization involves not only benefits but also risks, both to countries in question and investors that invest in these countries. we have ample experience of how things can go wrong, for example, the asian crisis in the late 1990's, and the series of crises in latin america around the turn of the millennium. and, also finland has first hand experience from a severe banking crisis that took place less than 20 years ago. there are many lessons to be drawn from these crises. here i want to highlight just two. first is the importance of sound macroeconomic policies. prudent fiscal policy and stability oriented monetary policy make an economy more resilient to shocks. in some cases, more flexible exchange rates could help prevent unsustainable developments. second is the need for careful sequencing of liberalization and coordinating capital account liberalization with structural measures that strengthen domestic financial systems. i would like to highlight a couple of issues in international finance that are particularly relevant for central banks. first, as shown clearly by recent market volatility, global financial integration has made different countries and markets more interdependent. consequently, domestic asset prices are increasingly determined by global factors. for instance, the question of to what extent the investment of china's current account surplus has reduced long term interest rates in advanced economies, most notably in the us, has been studied extensively in recent years. the results are not clear - cut but it seems that the impact has been substantial. for central banks this increased interdependency means somewhat reduced leverage to influence domestic longer -