, this also allows us to focus our monetary policy on maintaining price stability in tune with the developments in domestic demand, particularly with the considerable reduction in the exchange rate pass - through to inflation. furthermore, during periods of the impossible trinity states that a central bank can only pursue two of the following objectives : fixed exchange rates, independent monetary policy, and open capital account. bis central bankers ’ speeches stress, flexible exchange rates and independent monetary policy allow us to idiosyncratically respond to shocks in line with domestic economic conditions, which is crucial in calming markets. not monetary policy alone ladies and gentlemen, we have monetary policy space to keep prices stable. but price and financial stability are but one component of a vibrant economy. we need the other cylinders of the economy to be working, too. we would need the fiscal authorities to ramp up infrastructure spending. and we need the cooperation of the private sector to find feasible long - term projects that would help raise the absorptive capacity of the economy. in this whole process, we need you to facilitate the movement of funds from savers to users, in a safe, efficient and sound manner. the bsp will continue to pursue its mandate of securing price and financial stability through an appropriate policy stance and relevant measures. we trust that this will help anchor your confidence, so you could in turn do your part. we need treasurers and market participants to go beyond mark - to - market gains on your financial assets. we need you to translate those financial assets to gains in the real sector that can help create jobs. conclusion it is my view that in this post - gfc era, when we are in the midst of what former boe governor mervyn king calls a period of “ radical uncertainty ”, we can secure a path of sustainable growth by keeping economic confidence up. i trust that the bsp can engage you – in the financial markets – to work with us in anchoring confidence among all our economic stakeholders. in the process, we hope to be able to lay a solid bedrock of sustainable economic growth. thank you very much and i wish you a productive summit. bis central bankers ’ speeches

nils bernstein : challenges ahead for the danish economy speech by mr nils bernstein, governor of the national bank of denmark, at the annual meeting of the danish bankers association, copenhagen, 6 december 2010. * * * the world economy is slowly emerging from the crisis. global developments are diverse, with strong growth in the asian emerging economies and parts of south america and slower growth in the old industrialised countries. it remains uncertain to which extent private consumption in the usa and europe will take over when the government stimulus programmes expire and the necessary fiscal consolidation starts. high rates of unemployment and uncertainty about the future will dampen private consumption. investment will gradually begin to fuel the economy again, while the contribution from stock rebuilding will fade away. in germany and sweden – denmark ’ s two largest export markets – growth has been surprisingly positive so far. for denmark, danmarks nationalbank expects growth in the coming year to be just under 2 per cent, driven by moderate increases in private consumption, business investments and exports. the outlook is still subject to considerable uncertainty. the economy is presumably more likely to underperform than to exceed expectations. the developments on the korean peninsula remind us how strongly we can be influenced by uncontrollable events far from our part of the world. in europe we have recently witnessed at close hand what the consequences can be when markets lose confidence in the ability of sovereign states to manage their own debt problems. first it was iceland, then latvia, then greece and now ireland. where will it all end? fortunately, europe has so far been willing and able to lend a hand in collaboration with the imf. but if confidence is to be restored, the member states in question must make drastic cuts in public - sector wages, pensions, etc. while also raising taxes substantially. this goes hand in hand with social unrest and loss of international reputation. denmark is also facing a number of fiscal challenges. they are not as severe as in many other countries, but nevertheless they must be addressed in time so that they do not grow. the economic recovery plan deals with the period until 2015, but after that adverse demographics will increase the government deficit for many years – unless action is taken. if we in denmark are to avoid government debt growing to unmanageable proportions in the long term, we will need to increase taxes, adding to the already heavy tax burden, and put a much tighter rein on public spending than ever before. in addition, we need labour market reforms to boost the supply of