jaime caruana : concluding remarks - conference on “ central banks in the 21st century ” speech by mr jaime caruana, governor of the bank of spain and chairman of the basel committee on banking supervision, at the conference on “ central banks in the 21st century ”, hosted by the bank of spain, madrid, 9 june 2006. * * * it is my pleasure to participate in this concluding session of the conference and to be accompanied at this table by pedro solbes. i hope you found the presentations and discussions inspiring and motivating. i certainly did. we are now witnessing some profound changes in the way our societies organise their economic relationships, and these naturally pose new challenges to central banks, regarding both their role of monetary policymakers and their responsibility to preserve and foster safer and more efficient financial systems. over the last two days we have discussed some of the underlying forces of change and their implications for the design of sound monetary policy and financial architecture, including the question of how best to arrange payment and security settlement systems. let me briefly elaborate on some of the issues raised at the conference which i found particularly interesting. i will first reflect on the difficult question of how monetary and financial stability relate to each other and then move to some particular issues of special interest for a currency area, such as economic and monetary union ( emu ). monetary and financial stability the global financial system has developed at an unprecedented pace in the last two or three decades. during this time, many countries have undergone significant processes of financial liberalisation that have contributed to deeper and wider markets, in terms of both the number of participants and the assets traded on them. in the international sphere, financial liberalisation has led to a growing number of countries gaining access to global capital markets and to a stepping up of the economic and financial links among different regions. technological progress has also played an important role. the ability of market participants to obtain and process vast amounts of information almost instantaneously and to conduct complex transactions at low cost has grown enormously. in short, all these changes have significantly increased the possibilities for risk - sharing among economic agents. and, as such, there is ample consensus that this process of financial deepening brings tangible benefits for businesses, households and governments alike. there is little doubt either that this phenomenon will continue its course over the foreseeable future. in parallel to the changes on the financial landscape, we have also witnessed a remarkable performance by our monetary policy frameworks in terms of attaining and maintaining low

mario draghi : international financial institutions in the world economy alfieri lecture by mr mario draghi, governor of the bank of italy, at florence university, cesare alfieri faculty of political science, florence, 11 october 2006. * * * in the last five years the benefits deriving from the opening up of markets and the elimination of barriers to trade and to the international mobility of productive factors have become progressively greater. the world economy has expanded, per capita incomes have risen, inflation has settled to historically low levels, and the financial markets have been marked by abundant liquidity, low interest rates and limited asset - price volatility. in the first half of 2006 the world economy continued to grow at a fast pace ; indeed, its further acceleration took the main public and private research institutes somewhat by surprise, prompting them to revise up their forecasts for the two years 2006 - 07, except for the united states. according to the international monetary fund ’ s current estimates, which are in line with those of other international organizations and private institutes, world gdp growth will be 5. 1 per cent in 2006 and then decelerate slightly to 4. 9 per cent in 2007. these are remarkable figures by historical standards ; if the forecasts are borne out, the four years 2004 - 07 will be the period of greatest global expansion since the early 1970s. on the whole growth is becoming more evenly balanced among the different regions of the world : the slowing of the american economy is accompanied by a more vigorous recovery in the euro area and the continuation of growth in japan and the main emerging countries, especially china and india. global inflation was reduced by more than half in the second part of the 1990s and continued to decline in the subsequent years, falling to 3. 8 per cent in 2006. the combination in recent years of high growth and low inflation is the product of numerous factors, starting with the quality and credibility of monetary policy. in turn the action of the central banks has been facilitated by globalization. in particular, the far - reaching transformation of china ’ s economy and the entry of that country into the world trading system have helped to moderate inflation by stimulating productivity gains in the advanced countries exposed to chinese competition and by holding down the rates of increase in the prices of imported manufactures and in wages. on the financial markets, volatility has been much lower in the past few years than in the 1990s. the current phase is distinguished in particular by the simultaneous involvement of different instruments and markets, embracing equi