lorenzo bini smaghi : the world after the crisis – designing the future. a monetary order for the xxi century speech by mr lorenzo bini smaghi, member of the executive board of the european central bank, at the aspen institute italia, world economy conference, villa madama, rome, 23 june 2009. * * * i would like first of all to thank the organisers for inviting me to participate in this panel discussion on a new monetary order for the xxi century. 1 the title seems to suggest that we had a monetary order in the previous century, but then we lost it in the course of this decade and we now need something new. in fact, we have been searching for a new monetary order since the fall of the bretton woods agreement, in the summer of 1971, and even that order was not so orderly, after all. i will not try to define what a monetary order is. 2 what we ultimately need is a framework in which payment flows between residents of different countries ensure smooth trading in goods, services and financial assets. it matters not only because international trade is an engine for growth but also because payments imbalances are a natural result of non - barter economies. actually, the more developed the financial sector is, the easier it is to finance an imbalance between inward and outward payments, to the extent that the debt can be repaid or the credit can be cashed in. we could thus define a viable monetary order as one in which the credibility of the debtor and in the worthiness of the creditor can be maintained, while preserving the stability of the underlying real and financial markets. we know that a country ’ s purchases of goods and services from the rest of the world do not match at each and every point in time its sales, and therefore that its balance of payments is in fact unbalanced. such an imbalance may be a good thing, and be fully consistent with economic fundamentals, for two reasons. first, countries, just like individuals, want to smooth consumption over time. those that have a large productive potential and a young population tend to borrow so as to be able to invest in their future ; those that are rich and have a middle - aged population tend to repay debt and save for when the population is older and less active. 3 thus, a functioning international monetary order allows countries to smooth consumption over time, just as a bank does for individuals. the second benefit of a well - functioning international

jean - claude trichet : hearing at the economic and monetary affairs committee of the european parliament introductory statement by mr jean - claude trichet, president of the european central bank, at a hearing at the economic and monetary affairs committee of the european parliament, brussels, 30 june 2011. * * * dear madam chair, dear honourable members, it is a pleasure to be back in parliament and your committee for our regular exchange of views. once again, our meeting comes at a time when important decisions are being taken but also pending. of particular concern is the conclusion of the legislative procedure on the economic governance package. je tiens tout d ’ abord a saluer les efforts continus du parlement europeen et du conseil afin de rapprocher leurs positions sur le paquet de gouvernance economique. le conseil des gouverneurs aurait souhaite que le conseil europeen du 24 juin dernier fasse un geste d ’ ouverture envers le parlement europeen sur ce dossier. le principal point de desaccord – l ’ extension de la majorite qualifiee inversee dans le volet preventif du pacte de stabilite et de croissance – est d'une importance cle. la zone euro a urgemment besoin d'un cadre de gouvernance economique renforce et ambitieux. la crise actuelle demontre, de maniere irrefutable, s ’ il en etait encore besoin, les consequences nefastes de politiques budgetaires et economiques malsaines. deshalb ist es unerlasslich, zu einer ambitionierten einigung zu kommen. in der aktuellen lage ware eine einigung besonders begrußenswert, um deutlich zu machen, dass die richtigen lektionen aus der krise gezogen werden. let me now turn to the economic and monetary developments in the euro area since our previous meeting in march, as well as the two topics you have asked me to focus on, namely fiscal consolidation and monetary policy on the one hand, and sovereign debt developments on the other. i. economic and monetary developments let me first turn to the economic and monetary developments in