that we are feeding imbalances similar to those that played a role in the run - up to the financial crisis. with its massive asset purchases, the fed is distorting financial markets and creating incentives for managers and market players to take increasing risk, some of which may result in tears. and all this is happening in uncharted territory. we have aided creation of massive excess bank reserves without a clear plan for how to drain them when the time comes. and there is the challenge of doing so while keeping inflation expectations stable. nevertheless, i believe that the fomc will find practicable ways to normalize the fed ’ s balance sheet. i believe that practicable ways will be found to avoid inflationary pressures once the velocity of money returns to precrisis levels. i certainly believe that continuing to pare back on the amount of the fed ’ s large - scale asset purchases is a good start and should be continued at a measured pace that leads to their complete elimination as soon as is practicable. and i believe that as the tide of easy money recedes, mexico stands ready for the next phase. unlike other emerging market nations, mexico seized the opportunity to make some tough decisions and is more resilient and globally competitive as a result. macroeconomic stability, openness to trade and a unified commitment to confront rather than run from market forces indicate that the mexican economy is no longer an emerging economy ; it has emerged. for this man who spent his childhood in mexico and feels mexican, this is one of the most gratifying developments of my lifetime. so that ’ s why i say, ¡ andale pues, mexico! bis central bankers ’ speeches

). but, obviously, concerns about central bank profitability must not result in a less effective monetary policy. third, in currency unions like the european monetary union, risk and income - sharing mechanisms can help achieve a fair re - distribution among national central banks. these mechanisms are essential for promoting stability and cohesion within the monetary union, as they ensure that the costs and benefits of membership are distributed equitably among all participating central banks. 2 / 5 bis - central bankers'speeches in transitioning to a phase with a normalised monetary policy, these considerations will also help to normalise central bank capital adequacy. and the importance of sufficient capital goes beyond the mere accountancy aspect. if we were a commercial bank, large losses that erode capital would lead to bankruptcy. but central banks cannot go bankrupt. one reason for this is that a central bank can create money. thus, it cannot default on liabilities denominated in its own currency. a second reason is that, implicitly, central banks have the support of their respective governments as systemically vital national authorities. under extreme circumstances, a capital injection by the government may be considered. but as long as there is a realistic expectation that the net present value of future revenues – mainly from seigniorage – will be large enough to compensate for the current and projected central bank losses, financial support from a government seems unlikely to me. hence, central bank independence – independence from our respective governments to do what needs to be done to safeguard price stability – is not in jeopardy. from a trust perspective, it is important to be transparent about this. we have a saying in dutch that, in english, goes something like this :'trust arrives on foot and leaves on horseback '. well, we don't want the current turbulent times, with the current losses, to make the public's trust in our independence take off on horseback. because it would take much longer to regain it. i think the netherlands offers an interesting case study in central bank transparency. for instance, on losses. given the current central bank losses, you would expect critical press coverage. but in the netherlands, coverage has been relatively sparse and mild. most of the news outlets covered dnb's losses in a balanced way. and i think this is partly, maybe even mainly, due to our transparency on this matter. we very deliberately took the time to announce the possibility of losses. we explained the source of the losses when they occurred