sharon donnery : lessons from the past, safeguarding stability for the future address by ms sharon donnery, deputy governor of the central bank of ireland, at the centre for economic policy research ( cepr ) economic history symposium, dublin, 9 june 2016. * * * i would like to thank mark cassidy, yvonne mccarthy, micheal o ’ keeffe and rebecca stuart for their contributions to this speech. introduction good morning. on behalf of the central bank of ireland, i am delighted to welcome you to the fourth centre for economic policy research economic history symposium. the conference has a fascinating and varied programme and the central bank of ireland welcomes the chance to be involved. unfortunately the governor is unable to be here and sends his best wishes. both economic history and the history of economic thought provide valuable lessons for policymakers today, not least central bankers in our quest to safeguard price and financial stability. and yet, despite the numerous experiences of financial crises over the past two centuries, recent events highlighted starkly the lack of both analytical frameworks to assess the risks associated with the build - up of financial imbalances, and the policy tools to mitigate them. for my introductory remarks, i would like to reflect briefly on the recent actions taken by the central bank to contribute to financial stability in ireland through the introduction of macroprudential policies. lessons from the past the term “ macroprudential ” only surfaced in public documents in the mid - 1980s. 1 however, throughout much of the twentieth century, and particularly during the post - war period, there were numerous examples of central bank interventions in the financial system that can, in retrospect, be considered “ macroprudential ”. during this time, many central banks in europe, and the us, used quantitative controls rather than interest rates to steer the economy and maintain bank stability. measures such as credit controls, reserve ratios and liquidity ratios were used in europe, and loan - to - value and repayment caps in the us. 2 such measures were largely implemented at a time when the boundaries between fiscal, monetary, industrial and prudential policies were less clearly defined. financial market deregulation and increasing central bank independence led to the clearer delineation of these policy functions. at the same time, the rise of inflation targeting meant central banks used these non - interest rate policies less and less. in ireland, credit, capital, and interest rate controls were progressively dismantled from the 1980s. 3 see galati

##re ( the riksbank must be clearer ), column in the swedish newspaper dagens nyheter on 13 september. claussen, carl andreas, magnus jonsson and bjorn lagerwall ( 2011 ), “ a macroeconomic analysis of housing prices in sweden ”, in sveriges riksbank ( 2011 ), pp. 67 – 95. englund, peter ( 2011 ), “ swedish house prices in an international perspective ”, in sveriges riksbank ( 2011 ), pp. 23 – 65. finansinspektionen ( 2012 ), ” the swedish mortgage market ”, 13 march 2012. ingves, stefan ( 2012 ), “ stora risker med alltfor lag ranta ” ( major risks with an overly low interest rate ), svenska dagbladet newspaper, 18 october. isaksen, jacob, paul lassenius kramp, louise funch sørensen and søren vester sørensen ( 2011 ), ” household balance sheets and debt – an international country study ”, danmarks nationalbank monetary review, 4th quarter 2011, part 2, pp. 39 – 81. jansson, per ( 2012 ), ” my view on inflation targeting ”, speech at karlstad university, 11 october. national institute of economic research ( 2012 ), the swedish economy, august 2012. mishkin, frederic s. ( 2011 ), ” monetary policy strategy : lessons from the crisis ”, nber working paper no. 16755. bis central bankers ’ speeches qvigstad, jan f. ( 2005 ), “ when does an interest rate path ‘ look good ’? criteria for an appropriate future interest rate path – a practician ’ s approach ”, staff memo no. 2005 / 6, norges bank. reinhart, carmen m. and kenneth s. rogoff ( 2009 ), this time is different, princeton university press. rogerson, richard ( 1997 ), “ theory ahead of language in the economics of unemployment ”, journal of economic perspective 11 ( winter ), pp. 73 – 92. svensson, lars e. o. ( 2010 ), “ why a lower repo - rate path? ” speech held at umea university, 24 february 2010. svensson, lars e. o. ( 2011a ), " for a better monetary policy : focus on inflation and unemployment ”, speech at lulea university on