centre of christchurch have lost some production, generally from the impact on their workforce. the canterbury employers chamber of commerce estimates around 30 percent of businesses in christchurch were materially impacted by the february quake. however, we may be seeing the first signs of a stabilisation phase, with business confidence surveys recovering strongly. bis central bankers ’ speeches the official cash rate cut in march, along with government support programmes, looks like it has been helpful in stabilising confidence, and we would expect the deterioration in activity to be arrested by mid - 2011. in canterbury, activity can be expected to lift due to resumption of business activity, replacement spending and government support. but the canterbury economy will remain subdued due to wealth losses, weakness in tourism and construction, and obstacles including damage to infrastructure and capital. nonetheless, recovery in the canterbury economy, combined with the boost from the rugby world cup, will result in a marked pick - up pace of overall gdp growth. the reconstruction phase is expected to begin in earnest in 2012, with residential and nonresidential investment lifting growth sharply. spare capacity and labour will be absorbed rapidly, and inflation pressures will pick up from current low levels, prompting interest rates increases. the likely drivers of inflation from a reconstruction such as we will see in christchurch are the demand and supply of labour, materials and equipment, and the availability of finance. how government policy affects regulatory standards and the rebuild is also clearly important. how will the reserve bank deal with this? we are guided by our policy targets agreement ( pta ) with government that says, in the case of natural disasters, we should accommodate any initial inflation effects, such as higher rents or insurance premiums. however, we should respond to any medium - term generalised inflationary pressures that are likely to develop, as resources are devoted to reconstruction in canterbury. this means assessing the extent to which wages, construction costs and other prices rise nationally, as resources are drawn into the canterbury region. at the same time, monetary policy should also look to avoid any unnecessary instability in activity, the exchange rate and interest rates resulting from the earthquakes. this consideration was behind the decision to reduce the ocr in march so as to mitigate the near - term negative impact of the february earthquake. it is appropriate for monetary policy to remain supportive, given the continued downside risks to economic activity stemming from the canterbury earthquakes and more broad fragility in the new zealand economy. it is likely that the ocr remains on hold until these

jean - claude trichet : the governance of globalisation speech by mr jean - claude trichet, president of the european central bank, at the bocconi university and corriere della sera international forum 2008, milan, 12 may 2008. * * * it is a great pleasure to be here today at this forum and i wholeheartedly thank mario monti for having invited me. after presenting some key features of globalisation, i would like to discuss their implications for inflation and monetary policy, as well as issues related to the governance of globalisation at the international level. globalisation, while frequently quoted in many circles, is a rather broad concept open to many definitions. to my mind, a succinct general characterisation of globalisation in the current context can be thought of as essentially consisting of two main elements. first, globalisation involves the entrance of new participants into the global market - place. on this count, there has been a significant expansion in global productive capacity over the last decades. this has come through the opening up of emerging economies to international trade and production, notably the greater involvement of emerging asia in world trade, as well as central and eastern europe following the collapse of the soviet union. on the basis of one measure, an export - to - gdp weighted labour force, the effective global labour supply quadrupled between 1980 and 2005, with much of the increase having occurred since 1990. 1 the second main element of globalisation is the growing interdependence between both existing and new participants via trade, production and financial market linkages. trade in goods and services has effectively doubled over the last 20 years, with world imports and exports of goods and services as a share of world gdp having increased from 33. 9 % of world gdp in 1986 to 60 % of world gdp in 2006. the increase in interdependence on the financial side has been even more impressive, with the share of gross international asset holdings in world gdp – which provides a measure of financial openness – having exhibited an eightfold increase over the last 25 years ; now standing at more than 130 % of world gdp. indeed, global cross - border capital flows have been growing at an extremely robust pace over the last decade, increasing threefold as a percentage of gdp. 2 for the euro area over the last decade, the stock of outward and inward foreign direct investment has virtually doubled as a percentage of gdp since 1999. ultimately, these globalisation forces provide the scope for many