period of the “ great moderation ”. 7 if the underlying monetary dynamics signal price risks in the medium to long term, monetary policymakers have to respond, for at least two reasons. first, a monetary policy that “ feeds ” asset price developments in an upturn may amplify the dynamics of the financial markets and encourage procyclicality. second, the monetary policy response to downturns in the asset markets has an impact on market participants ’ risk perception in the following upturn. this is especially evident where monetary policymakers lower rates asymmetrically in times of severe financial market downturns and, at the same time, more than is warranted by the baseline outlook for prices and growth. monetary policy should be applied symmetrically. in the words of axel weber, bundesbank president and member of the ecb governing council : “ a more symmetric approach would treat boom and bust episodes not as isolated events but would try to look through the financial cycle in order to steady policy. to be more specific, a more symmetric policy would also realise implicit risks in times when money and credit growth is dynamic, asset prices go up and risk perceptions decline. this can create the need to act despite sufficiently low current inflation rates. s claessens, m a kose and m e terrones ( 2008 ), what happens during recessions, crunches and busts?, forthcoming imf working paper, available at http : / / www. aei. org / events / eventid. 1759 / event _ detail. asp. k assenmacher - wesche and s gerlach ( 2008 ), interpreting euro area inflation at high and low frequencies, european economic review ( 52 ), pp 964 - 986. this, however, does not mean that monetary policy should downgrade the price stability objective for the sake of other objectives. rather, it means that central banks should take a longer - term perspective which takes into account the future inflationary consequences of such unfavourable developments. ” 8 iv challenges for the stabilisation of the financial system : refining and implementing the basel ii framework, addressing procyclicality, and strenghtening the institutional setup of supervision 9 the last part of our journey brings us right up to the present day, where we are facing a financial crisis of historic dimensions. while my topic is not crisis management but rather long - term crisis prevention, let me nevertheless begin with a few

jens weidmann : turning points in history – how crises have changed the tasks and practice of central banks welcome remarks by dr jens weidmann, president of the deutsche bundesbank, at the bundesbank conference “ turning points in history : how crises have changed the tasks and practice of central banks ”, frankfurt am main, 9 july 2015. * 1. * * introduction ladies and gentlemen let me warmly welcome you all to the bundesbank conference entitled " turning points in history : how crises have changed the tasks and practice of central banks ". it is the bundesbank ’ s first historical conference, and i am delighted it has met with such great interest. “ history will teach us nothing ”. i usually quite like the songs written by the english musician sting, but i think he ’ s definitely barking up the wrong tree with this provocative song title. my view is that we can indeed learn a great deal from history. so i ’ m rather more inclined to see things like confucius, who said : " study the past if you would define the future. " the history of central banking is highly instructive when it comes to defining the future of central banking. that is why some of the most renowned and influential economists have delved into monetary history. drawing lessons from the past, however, requires both a profound knowledge of central bank history and a thorough understanding of the challenges that currently face central banking. that ’ s why we are proud that this conference has brought together some of the most eminent experts in both economic history and macroeconomics, as well as active and former central bankers, and – last but not least – two acting finance ministers. let me therefore cordially thank all the speakers, panellists and moderators who are involved in today ’ s event. my special thanks go to harold james, who helped to develop the idea for this conference, and who provided valuable input during the planning phase. i would also like to thank the organisers of the conference and, particularly, heinz herrmann, who arranged the programme. heinz herrmann was the bundesbank ’ s head of research until he retired at the end of last year. as we today entered the quiet period before the next monetary policy meeting of the ecb governing council, my remarks should not be construed as containing any comments on the current monetary policy stance. instead, i would like to share my thoughts on the current and future challenges faced by central banking against the backdrop of