the context of scarce natural resources. in a market economy, economic transformation and reallocation is the business of the financial markets. but what kind of financial markets can support and promote such growth? how can it be regulated in the global context? what kind of international monetary system can provide the infrastructure for it? and what does it require of the central banking community? tomorrow afternoon is dedicated to the issues of finance and economic growth. the keynote speech will be delivered by janet yellen, vice chairman of the federal reserve board. the final panel will include governor stanley fischer from the bank of israel and professors philippe aghion from harvard and martin hellwig from the max planck institute in bonn. bis central bankers ’ speeches i am thrilled by the prospect of learning from this set of the world ’ s foremost minds, gathered here today, and am looking forward to many stimulating and fruitful exchanges. once more, let me extend to you all a very warm welcome. let the conference begin! bis central bankers ’ speeches

finland became a member of the franc zone, which included the latin monetary union and some other countries which had adopted a monetary system identical to france. the early european integration of finland came as a surprise to many. one of them was the famous german musician and conductor, hans von bulow. he travelled to helsinki from st petersburg in 1883 and wrote to his wife : “ how are you? we are terribly well despite a severe cough and restless sleep – i have received the russian new year with great strength. but am i still in russia? here they follow the european calendar, speak so much german, finnish and swedish, and also no longer count in roubles, but in markkaa and pennia, which have just the value of the french francs and centimes – also the postage stamps are different, as you see... ” the link to the franc proved very durable. the exchange rate of the markka vis - a - vis the franc remained stable until the first world war, 36 years later. this period was the time of bis central bankers ’ speeches the great industrial takeoff in finland. the country began to catch up with the wealthier countries of europe. capital imports were a crucial ingredient in this takeoff. railroad construction, in particular, was financed with bonds floated in germany and france. the same drive for integration and search for stability also characterizes the later development of finnish monetary policy. the arrangements varied – the interwar gold standard, the sterling bloc in the 1930s, the bretton woods system – but monetary and exchange policy was always seen as a way to promote the country ’ s participation in the international division of labour, and so to overcome the very limited range of natural resources in finland. the other side of the same coin was that the export - oriented growth policy of finland relied much on devaluations and financial repression, especially after the second world war. in terms of economic growth, the results were good, but the structure of the economy, and especially the financial sector, remained weak. finland successfully caught up with the world ’ s most advanced economies. but it also experienced a traumatic financial crisis in the early 1990s. when money markets and capital movements were deregulated in finland in the 1980s, the country was not ready. there was a backlog of demand for credit, inflation was too high and the banks were undercapitalized. a credit bubble emerged, fuelled by short - term capital imports and rather reckless risk -