[ former chair of the us federal reserve ben ] bernanke has a good answer to this issue of distorting the markets, which is to say that purchases by the central bank of government securities with different maturities have exactly the same impact as a change in maturities done by the treasury itself. the public sector always impacts the yield curve, one way or the other. the idea is that if the central bank uses an active policy to do so, then it ’ s to correct distortions that exist in financial markets and ensure that lending rates to businesses and households in the economy as a whole are at the right level to get to the level of activity that would be desirable. if there are rigidities and distortions in the private sector that do not engineer the smooth functioning of the economy, then public intervention is fully justified. it does not add up to manipulation because the reality is not perfect to start with. i ’ m just now thinking in very abstract terms ; this was never discussed at the ecb ’ s governing council. this is my personal take on possibilities ; it is not more than that. we didn ’ t start any discussion about the medium - term future of monetary policy, it ’ s too soon in europe to start thinking about that. but i ’ ll just say it ’ s a possibility and it can work. we could buy more bonds to enforce it – the 33 % 1 / 8 bis central bankers'speeches limit [ that the ecb has on buying all of the outstanding stock of a country ’ s government bonds ] is a self - binding decision by the governing council. that decision could be slightly changed, theoretically, of course. what about the use of the other non - standard measures? there is a view that some of the tools, such as the outright monetary transactions ( omt ) programme, are closely linked with the current ecb leadership and not as much with the ecb itself. it ’ s important to underline that the unconventional measures that we used – all of them are now part of the ecb toolkit. so in the future, if ever we face again stressful situations in the euro area, the ecb would have no excuse not to use such instruments to stabilise the situation. that i wanted to repeat : it would be virtually impossible, if such a stressful situation occurred again, for the ecb to ignore that these instruments are effective, legal and part of the toolkit. people are important of course, but

jean - claude trichet : reflections on the global financial system keynote speech by mr jean - claude trichet, president of the european central bank, at the 2007 25th anniversary iif annual membership meeting, washington dc, 20 october 2007. * i. * * introduction it is a great pleasure to be here on the occasion of the 25th anniversary iif annual membership meeting. during the last quarter of a century, the institute has proved to be both an important coordination forum for the international financial industry and a counterpart to international financial institutions and fora, making many valuable contributions to the international dialogue on the global financial system. back in 1983 when the institute was founded – in response to the international debt crisis – one of its key jobs was to provide its members with information about the policies and performance of borrowing countries. as time passed by, the range of the institute ’ s activities broadened and it has worked as well on such issues as global financial regulation. moreover, it played an active role during the last number of years in the debate about the international financial architecture and emerging market policy issues. celebrating today ’ s anniversary brings to mind not only the many policy issues that we discussed over the past 25 years but also the many colleagues and friends from all parts of the world whose professional careers are in various ways linked to the development of the international financial system and to the issues that the institute has been dealing with. i myself have interacted with the iif on many occasions, not only back in the 1980s when i was chairman of the paris club, but also thereafter in my capacity as governor of the banque de france and today as president of the european central bank. in my talk today, i will seize the opportunity of the 25th anniversary of the institute and share with you some thoughts on two broad issues that i deem particularly relevant. first, i will recall the past financial crises that have hit emerging market countries over the last two and a half decades and focus on the progress that has been achieved with regard to devising mechanisms for crisis prevention and crisis containment. second, i will take a closer look at the recent turmoil in financial markets and provide some preliminary reflections. ii. emerging market countries and their access to international financial markets the financial integration of countries into the global economy continues at a high pace. while advanced countries are the most financially integrated, emerging market countries have significantly increased their cross border asset and liabilities positions and hence improve their degree of integration. the tremendous benefits that are associated with this integration process