radovan jelasic : macroeconomic policy in 2009 speech by mr radovan jelasic, governor of the national bank of serbia, at the second business roundtable with government representatives, organized by the ekonomist media group, belgrade, 27 october 2008. * * * in terms of political turbulences and uncertainties, this year can only be compared with the year 2000. the country was faced with the issue of territorial sovereignty, early parliamentary and local elections, and signing and deferral of ratification of the stabilization and association agreement with the european union. as regards the economy, however, no sooner had inflationary pressures subsided in the wake of a fall in prices of food and petroleum products, when a new, still greater challenge appeared on the scene. an unprecedented crisis broke out in the global financial markets and, whereas its negative consequences were soon felt in serbia as well, its end effects and duration are still impossible to forecast. but let me ask you a question : is anyone in this country aware that, despite all the above external and internal turbulences, inflation in serbia is within single - digit bounds, gdp growth is still robust, the exchange rate had, until recently, been “ firmly ” stable, real wages have been rising at double - digit rates for several years now, credits are available, etc.? or, let me ask another question which is more important both for myself, and, i am firmly convinced, for the future of this country – why do people take these results “ for granted, ” as something which will be sustained of itself, regardless of how we behave? why do they believe that we can keep on disregarding external and internal influences without bearing any consequences? and, especially when we all know that our doings were due to frequent elections. why must “ bad times ” return before people understand that present times were good, only we failed to make the best of them?! macroeconomic stability in serbia will continue to hinge on the following key factors : 1. movements in global money and capital markets leave no room for doubt : the situation is bad, and, for the time being, there is no light at the end of the tunnel. capital markets worldwide are swayed by unprecedented turbulences and money remains expensive despite а ) government interventions worth thousands of billions of euros and b ) policy rate cuts and cash injections by central banks. at the same time, the banking system faces a number of serious challenges, such as : а ) capital

thomas jordan : monetary policy and government debt – different perspectives summary of a speech by mr thomas jordan, member of the governing board of the swiss national bank, at the 13th zermatter symposium, zermatt, 28 august 2007. the complete speech can be found in german on the swiss national bank ’ s website ( www. snb. ch ). * * * the effects of fiscal and monetary policy overlap. fiscal policy can have a cyclical effect, while monetary policy can also generate income for the government. however, theory and practise have shown that, first and foremost, monetary policy must be used to ensure price stability and – to a limited extent – to dampen economic fluctuations. the principal aim of fiscal policy, however, must be to ensure that the national budget is financed as efficiently as possible. when government debt levels are high and budget deficits get out of hand, they pose a significant threat to a monetary policy that is geared to stability. misusing monetary policy as an instrument of fiscal policy inevitably leads to a loss of purchasing power. many episodes of high inflation have come about, ultimately, as the result of funding requirements on the part of the state. nowadays, the independence of many central banks shields them – to a large extent – from the fiscal greed of politicians. nevertheless, time and time again, when government finances have fallen into disarray, central banks have been seen to come under political pressure. from a monetary viewpoint, however, government debt is not entirely unwelcome. on the contrary, government debt is a vital ingredient of modern monetary policy. a liquid market for government bonds is a prerequisite for a modern and efficient financial market. functioning financial markets, in turn, are necessary for an efficient monetary policy : a liquid market for governments bonds enhances the efficiency of the monetary transmission mechanism. yields on government bonds and indicators derived from these yields are an important source of information for the monetary policy decision making process. finally, in implementing government policy, government bonds serve as collateral. sound government finances are a prerequisite for the long - term success of monetary policy and for maintaining price stability. however, healthy government finances do not necessarily imply zero government debt. for the functioning of financial markets and an efficient monetary policy, a liquid market for government bonds is a considerable advantage.