that poses the problem of how and when normalizing monetary policy. on the second point, a challenge relates to possible spillover effects on emerging - market economies of changes in the monetary policy stance in advanced countries. large capital flows went to emerging - market economies in the last years, in search for yield, putting upward pressure on asset prices and exchange rates in those economies. they might suddenly reverse when monetary conditions change in advanced economies. the risk is that the process becomes disorderly, with impaired liquidity in certain markets or asset classes, rapidly diffusing contagion to other correlated asset classes. these risks call for clear and effective communication strategies by central banks, while the authorities in emerging economies should further strengthen policy buffers and further advance structural reforms. another delicate policy challenge regards the relation between monetary and fiscal policies. the combination of high public debt – accumulated in many advanced economies in response to the financial crisis – and very low interest rates has strengthened the interdependencies between the two policies. exceptionally low nominal interest rates have contained debt servicing costs, and that ’ s good news ; the flip side is that fiscal positions are highly exposed to changes in the monetary policy stance, especially if changes are abrupt. finally, what if the current low interest rates were the new long - run equilibrium? in this case i would see serious challenges for monetary policy management. central banks might more often encounter the zero lower bound on nominal rates, which would imply less room to maneuver the policy rate to counteract deflationary shocks. the economy would be less resilient to negative shocks. central banks might have to increasingly resort to what we call unconventional policies. but we do not know how effective these tools are as a normal business cycle stabilizer, and what macroeconomic risks they might entail. let me conclude signaling another risk. economic policies became exceptionally accommodative after the financial crisis in order to save the world from another great depression. financial panic was destroying households ’ and corporates ’ confidence and curtailing aggregate demand, so macroeconomic policies, both fiscal and monetary, had to fill the gap, as long as needed. the phase of very low nominal interest rates has been necessary, and still is necessary in many areas of the world including the euro area, in order to support growth, fight deflation risks and sustain employment. but low growth, and the ensuing low interest rates, risk feeding on themselves if allowed to linger for too long : households may eventually feel compelled to save more

rate environment? i would indicate two sets of factors : transitory, and structural. the latter are particularly important, since they may suggest that the current environment is a long - run phenomenon, bound to stay with us for quite some time. the transitory factors are evident : first of all the expansionary monetary policy stance put in place by many central banks in response to the global financial crisis, and, in the euro area, also to the sovereign debt crisis. we know that most central banks in the advanced countries, as policy rates were reaching the zero lower bound, have enriched their monetary policy toolbox with various unconventional measures, the most important and visible one being programs of securities purchases ( qe ). another transitory factor is the de - leveraging by the private sector. in part this is due to a financial regulation becoming much stricter than before the crisis. bis central bankers ’ speeches and here comes the structural factors. they can be summarized as follows : an excess of desired saving over desired investment, leading to lower economic growth and real interest rates. this is essentially the secular stagnation hypothesis proposed last year by larry summers. 1 barry eichengreen, one of the most prominent economic historians of our times, has recently written an illuminating article on this topic. 2. he discusses four possible explanations. 1 ) high savings rates in emerging - market economies. this is the well - known global savings glut hypothesis put forward years ago by ben bernanke. 3. the idea is that in some emerging countries, china in particular, social protection systems are so limited and weak that households feel forced to increase their precautionary saving. 2 ) the decline in the relative price of investment goods ( machinery, equipment, icts ), thanks to technological progress. for a given investment project, a fall in the relative price of investment reduces the demand for funds. with less investment spending chasing the same savings, the result can be a lower real interest rates and, potentially, a chronic excess of desired saving over desired investment. 3 ) a lower rate of population growth, in the advanced economies and now also in some emerging markets. it is reflected in a slower growth of the labor force, in turn requiring less investment. 4 ) the fourth possible explanation is the more controversial one. the idea is that the pace of scientific and technological inventions has slowed down, since the golden xx century of electricity and icts, and will never recover, causing a corresponding permanent scarcity of