indirect taxes and an indirect impact through the necessary adjustment of the production process. this adjustment will involve heightened tensions on production capacities, as part of the equipment stock will have to be discarded due to changing regulations or due to increases in its operating costs with higher taxes. some temporary impact on inflation may therefore be expected during this process. however, in the medium run, the challenge of climate change may lead to a significant improvement in technological progress, which will lead a minima to reduce energy consumption and carbon dioxide emissions for a given level of output but could also stimulate productivity growth. this inflationary impact highlighted before would then be offset both by downward pressures on energy prices and by productivity acceleration. * * * as we can see from this rapid review of risks factors to inflation in the short to the long run, there is a clear upward bias to risks regarding inflation, which has to be taken into account by economic policy. it is thus all the more necessary to insure a proper degree of competition on product markets and a well - functioning price system, inducing changes in consumption or production patterns according to the relative scarcity of products. there are large margins of improvement with respect to product market competition both in emerging and advanced countries. in the euro area, the fulfilment of the lisbon agenda objectives could have a significant offsetting impact. higher employment rates and acceleration in productivity would lead to both less inflation and higher growth. the low current employment rates of the younger and older workers provide a wide acceleration margin for european growth. the potential catching - up of information technology use in the euro area would lead to a substantial increase in productivity growth. both evolutions would significantly reduce the inflation content of growth and help contain inflationary pressures. however, most of the burden lies on central banks, as “ inflation is always and everywhere a monetary phenomenon ”. the current “ two pillar ” approach of the governing council with a crosschecking between the economic and the monetary analysis has, i believe, permitted us to deliver a stance of monetary policy which has been totally appropriate to the situation of the euro zone. the anchoring of inflation expectations at a level consistent with price stability, which is currently observed in the financial market, is therefore completely justified. the years to come will give to the central bankers the opportunity to demonstrate that these years of “ great moderation ” are not just the result of lucky circumstances but are largely due to an improved monetary policy framework.

##ed to the united states, which, in lowering financial constraints, amplified the current account deficit of this country. one may actually wonder whether this also partly contributed to the development of a financial bubble in the united states. the key idea i would like to take from this literature is that finance most certainly played a key role in the emergence of global imbalances. how and why may the g20 roadmap help financial soundness and global rebalancing as the global economy is recovering from the crisis, the g20 roadmap aims first at ensuring the transition to a strong, sustainable and balanced growth. by “ strong ”, we mean that growth should converge to the growth rate of potential output over the medium term whereas that potential is enhanced by the implementation of more effective structural policies. “ sustainable ” growth should be consistent with public finance sustainability, price and financial stability, along with social and environmental policy goals. finally, “ balanced ” growth implies a growth that is broadly based across all g20 countries and all regions in the world, and as i said earlier, that should not generate persistent and destabilizing internal or external imbalances. “ balanced ” growth also implies to facilitate the catching up of developing countries ( and the taking off of the poorest ). drawing the lessons from the crisis, growth cannot be strong without being sustainable and cannot be sustainable if it is not balanced. the so - called “ framework for strong, sustainable and balanced growth ” is the key mechanism by which g20 countries work together to achieve these objectives. with support from the imf, g20 countries are going through a mutual assessment process by sharing their policy frameworks, programs and projections and assessing their consistency with the common objectives. this process will lead the g20 to recommend policy options to its members. policy options obviously depend on national circumstances. countries facing serious fiscal challenges need in particular to accelerate the pace of fiscal consolidation, while countries that have the capacity should expand domestic sources of growth and help cushion a decline in demand from other countries. reforms of social safety nets will be essential in both cases and structural reforms of the product and labor markets will be key to foster stronger growth in the medium and long run. policy options may also entail exchange rate adjustments consistent with smooth rebalancing. in search of global financial safety nets there is another side to rebalancing where finance matters. starting with the asian crisis of 1997 – 1998 and up until the global shortage of liquidity that took