alan greenspan : issues for monetary policy remarks by mr alan greenspan, chairman of the board of governors of the us federal reserve system, before the economic club of new york, new york city, 19 december 2002. * * * although the gold standard could hardly be portrayed as having produced a period of price tranquility, it was the case that the price level in 1929 was not much different, on net, from what it had been in 1800. but, in the two decades following the abandonment of the gold standard in 1933, the consumer price index in the united states nearly doubled. and, in the four decades after that, prices quintupled. monetary policy, unleashed from the constraint of domestic gold convertibility, had allowed a persistent overissuance of money. as recently as a decade ago, central bankers, having witnessed more than a half - century of chronic inflation, appeared to confirm that a fiat currency was inherently subject to excess. but the adverse consequences of excessive money growth for financial stability and economic performance provoked a backlash. central banks were finally pressed to rein in overissuance of money even at the cost of considerable temporary economic disruption. by 1979, the need for drastic measures had become painfully evident in the united states. the federal reserve, under the leadership of paul volcker and with the support of both the carter and the reagan administrations, dramatically slowed the growth of money. initially, the economy fell into recession and inflation receded. however, most important, when activity staged a vigorous recovery, the progress made in reducing inflation was largely preserved. by the end of the 1980s, the inflation climate was being altered dramatically. the record of the past twenty years appears to underscore the observation that, although pressures for excess issuance of fiat money are chronic, a prudent monetary policy maintained over a protracted period can contain the forces of inflation. with the story of most major economies in the postwar period being the emergence of, and then battle against inflation, concerns about deflation, one of the banes of an earlier century, seldom surfaced. the recent experience of japan has certainly refocused attention on the possibility that an unanticipated fall in the general price level would convert the otherwise relatively manageable level of nominal debt held by households and businesses into a corrosive rising level of real debt and real debt service costs. it now appears that we have learned that deflation, as well as inflation, are in the long run monetary phenomena,

understanding how – in light of evolving financial vulnerabilities – funds may collectively respond to different adverse shocks. and, in turn, how such behaviour could affect the functioning of core global markets in times of stress. this can only be achieved through close collaboration, both across borders and across authorities. and it is necessary if we are to mitigate system - wide vulnerabilities effectively ex ante. which brings me to my last point, before we finish up. delivering a macroprudential perspective in the oversight of the funds sector will not happen overnight. it took over a decade to develop that framework for the banking sector. and that was from a starting point of decades of microprudential regulation. 4 / 5 bis - central bankers'speeches still, it is important that we make progress and – where we do identify systemic vulnerabilities – we have the courage to act, before shocks hit. because ultimately the costs of inaction can be large, both for investors and the broader economy. this has been, and will remain, a priority for the central bank of ireland in the years ahead, working with colleagues internationally and domestically. so let me finish off here. thank you again for joining us today. have a good evening and a safe return home to those travelling back. 1 see fsb ( 2023 )'revised policy recommendations to address structural vulnerabilities from liquidity mismatch in open - ended funds'at : https : / / www. fsb. org / wp - content / uploads / p201223 - 1. pdf. 2 see central bank of ireland ( 2022 )'the central bank's macroprudential policy framework for irish property funds ', available at : https : / / www. centralbank. ie / docs / defaultsource / financial - system / financial - stability / macroprudential - policy / nbfi / macroprudentialmeasures - for - irish - property - funds. pdf ; and central bank of ireland ( 2024 ),'the central bank's macroprudential policy framework for irish - authorised gbp - denominated ldi funds ', available at : https : / / www. centralbank. ie / docs / default - source / publications / consultation - papers / cp157 / macroprudential - framework - for - irish - authorised - gbp - ldifunds. pdf? sf