presentation he delivered earlier ) that the financial crisis broke out in an economic environment with relatively low inflation rates. in other words, the price stability that set in during the great moderation could not prevent the start of the great recession. furthermore, the “ mop up after ” strategy in the aftermath of the financial crisis proved much costlier than “ leaning against the wind ” would have been. it was now visible to the naked eye, without requiring sophisticated econometric models, that distortions from relatively high inflation are second order relative to losses from financial sector distortions ( stiglitz, 2010 ). that being said, it is safe to assume the crisis also shattered the illusion that the great challenges to the monetary policy decision - making framework have been overcome at least in part. reality proved much too complicated to be managed based strictly on ideal theoretical schemes. in other words, textbook economics was no longer in tune with financial market realities. this also calls for rethinking the connections or retracing the boundaries between price stability and financial stability. the global crisis has once again drawn the attention of economic policymakers and theorists to the issue of separating or integrating price stability and financial stability tasks. the idea that the two tasks should be completely separated had gained ground before the outbreak of the crisis. the rationale behind this view was to free the monetary policy conduct from conflicting objectives and thus render policymakers ’ mission and life easier. following this line of thought, it was considered that two distinct entities should be in charge of the two tasks respectively. in particular, it was advocated that banking sector supervision should no longer be assigned to the central bank, but rather to an independent agency ( which might also ensure the consolidated supervision of all financial markets ). i, myself, found the idea rather interesting at the end of the nineties, when the collapse of several romanian banks influenced the decision - making process at the national bank of romania. i realized at the moment how costly it was in terms of reputation for a central bank to be in charge of supervision and prudential regulation – not to mention that the separation appeared quite fashionable after the newly - established fsa had become operational in the uk. at the same time, i vividly remember the conflict between price stability and financial stability, when i had to mediate the divergent positions taken during board meetings by the deputy governors coordinating the two functions, not by virtue of personal affiliations, but due to the very nature of the specific task they had been

countercyclical macroeconomic and prudential policies may be relied upon to tackle a slowdown in capital inflows. where there is less room for manoeuvre, tightening monetary and fiscal policies may be required to lower financing needs and attract additional inflows. where foreign reserves are adequate, they may be used to moderate or smoothen exchange rate depreciation. let me now move on to the second point of my intervention : how inflation targeting has evolved in response to the post - crisis global economic and financial environment. the nbr, the same as the central banks of poland, czech republic and hungary, is an inflation targeter. in romania, we have remained loyal to inflation targeting since 2005, but inflation targeting itself is quite different now from 15 years ago. indeed, it is rather difficult to say at present what is left of its underlying principles. the outbreak of the global crisis and the post - crisis developments have naturally led to the tailoring of the strategy to the new realities. some departures from the old orthodoxy are almost unavoidable in 1 / 3 bis central bankers'speeches the present context, marked by a changing global financial and economic landscape. for instance, after the crisis, forex interventions re - entered the arsenal of many central banks, including some of the previously more purist floaters. a case in point is the czech national bank, which resorted to the so - called “ exchange rate commitment ” from november 2013 to april 2017, intervening whenever necessary without time or volume limits to prevent the appreciation of the koruna below a publicly announced floor. i find relevant what agustin carstens, general manager of the bis, said in his lecture held at the london school of economics in may 2019 : “ the textbook version of the inflation targeting framework, which prescribes pursuing inflation stability with floating exchange rates through adjustments of a short - term interest rate, is obviously too narrow for eme central banks. in particular, the financial channel of the exchange rate gives rise to difficult trade - offs for monetary policy, while at the same time complicating the conduct of monetary policy by weakening its transmission. eme central banks have risen to this challenge through their innovative use of additional policy instruments. they have turned to fx intervention to deal directly with the financial channel or insure against undesired exchange rate swings, and to other non - orthodox balance sheet policies as well as macroprudential tools to deal with specific imbalances or vu