increasing contagious consequences in global economic and financial system. second is the institutional shift represented by an increasing role of non - banks and shadow banks, especially in some advanced economies. this has long been a trade - off for policymaking between economic and social considerations. on one hand, the shadow banking sectors undoubtedly provide financial opportunity to those with limited access. this institutional development also has encouraged higher competition in the financial system, leading to greater efficiency. on the other hand, this informal financial sector remains under - regulated and may incentivize risky activities, such as overleveraging, which could become systemic and prone to produce adverse outcomes to the system. bis central bankers ’ speeches the third development is what has taken the forefront role as an underlying driver of the recent crisis and policies that follow. it is the increasing interconnectedness amongst economies and financial markets. rapid integration of international trade and finance has led to promising economic prosperity. however, the increasing co - movements of business and credit cycles globally also played an important part in amplifying and spreading booms and busts cycles across the economies. this new financial environment has set stage for possible negative impacts both in terms of magnitude and depth on the real and financial sectors, especially those of the advanced economies. to that extent, we have witnessed, the deployment of unconventional sets of monetary policy instruments in order to shore up the economies and financial markets. part ii : responses to crisis and policy spillovers to emes : new trends of monetary policy ladies and gentlemen, the implementation of the extra - ordinary policies and financial reforms in advanced economies to tackle the crisis has generated momentous spillovers upon emerging market economies. these unintended effects are, mainly, ( 1 ) liquidity surge that drove up financial market volatility and created significant demand for safe assets, and ( 2 ) regulatory reforms in the financial system, mostly the banking sector, which raised the operating costs of financial institutions amidst heightened risks in the financial system. moreover, the situation had worsened as it added to the direct impact of weakened global demand. although the spillover impacts to individual economies have been uneven, monetary policy in most emerging markets have faced a tradeoff between achieving domestic objectives and managing external spillovers. the limited and, in many cases, stretched monetary policy tools have been designed to mitigate financial imbalance and vulnerability, and to restore economic growth and maintain targeted inflation. our experiences from various quantitative easing ( qe ) episodes remind us that the traditional monetary policy at

and leverage its economic and strategic power. besides, there is an expectation here : the world is watching europe. on climate change, for example, only europe can achieve what was decided in the paris agreement. and donald trump himself : is he a factor in economic development? and growth? he ’ s constantly taking credit for the strength of the us economy. in the short term, yes, because he is going to reduce taxes on us firms – that will create growth in the united states. in the long term, it ’ s a different story. speaking of risks, mr cœure, i imagine you have looked closely at the economic programme of the new italian government, which would necessarily lead to an increase in its deficit and debt. what do you have to say about that in frankfurt? first of all, we respect democracy. so we don ’ t lecture newly elected governments. you ’ re not saying “ the markets will teach the italians to vote for the right thing ”, as one european commissioner put it? for example. we will see what the italian government proposes. basically, in the end, when you look at the situation the italian economy is in, the challenges facing italy are pretty straightforward. its public debt is at a very high level. €2. 4 trillion. exactly. and its productivity, its productivity growth – so its potential, structural growth – is very weak compared with that of other large european countries. those two challenges have nothing to do with the euro, or even europe. we will see what the italian government puts forward as a solution. but they are aware of these challenges : the new minister of finance, mr tria, spoke about this the day before yesterday. but how will you respond if their deficit exceeds 5 % of gdp, or even reaches 7 %, as some forecasts suggest? will you intervene? it ’ s not necessarily up to you, but it ’ s instability that... it ’ s up to the commission and the governments to ensure compliance with the budgetary rules. 2 / 3 bis central bankers'speeches it ’ s true that in frankfurt we consider these rules important, because the euro is a community, we are in this together. it ’ s like shared ownership, so we start by respecting the rules. yesterday mario draghi, the president of the ecb, felt the need to mention that the euro is “ irreversible ” when talking about italy. why did he say that? why did he emphasise