therefore not yielded to calls to relax our monetary policy stance. if we did, monetary policy would only strengthen the shock - related inflationary pressures. at the current juncture, however, with inflation in the euro area having reached a record high and inflation risks still on the upside, there is the concrete risk that longer - term inflation expectations will start creeping up more strongly. the experience of the great inflation demonstrates that a stability - oriented central bank is well - advised to fight the risk of broad - based second - round effects decisively and proactively. by doing so, it will keep the costs of curbing inflation dynamics relatively low. our commitment to a systematic focus on price stability is even more important, as the recent rounds of wage settlement in the euro area have not contributed to curbing inflation pressures. on the contrary, recent wage dynamics in conjunction with elevated and persistent energy and food price pressures have increased the risk of a prolonged period of intolerably high inflation. at our last meeting of the ecb governing council, we emphasised that, given the uncertainty about the economic outlook and the prevailing downside risks to economic growth, the continued vigorous expansion of money and credit and the strong upside risks to price stability, the governing council is in a state of heightened alertness. financial markets should by now have understood our readiness to act. it is our strong determination to secure a firm anchoring of medium and long - term inflation expectations in line with price stability. after all, the best contribution that the eurosystem can make to sustainable growth in the euro area is to safeguard price stability in the medium to long term and lastly we should also not forget that a reliable monetary policy also helps to reduce uncertainty in times of an ongoing financial market turmoil. thank you for your attention. references beyer a., v. gaspar, c. gerberding and o. issing : “ opting out of the great inflation : german monetary policy after the breakdown of bretton woods ”, paper prepared for the nber conference “ a retrospective on the great inflation ”, organised by michael bordo and athanasios orphanides, woodstock, september 2008. borio, c. ( 2008 ), “ the financial turmoil of 2007 -? : a preliminary assessment and some policy considerations ”, bis working paper no 251, march 2008. clarida, r., j. gali and m. gertler ( 2000 ) : monetary policy rules and macroeconomic stability : evidence

andreas dombret : global reforms and the market economy system welcome address by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the reception given by the deutsche bundesbank at the annual congress of the verein fur socialpolitik, frankfurt am main, 6 september 2011. * 1. * * welcome ladies and gentlemen, members of the verein fur socialpolitik, on behalf of the deutsche bundesbank, i would like to warmly welcome you to this reception. i am especially delighted to accept the role of host at the bundesbank ’ s reception once again this year. the bundesbank is a true friend and supporter of the verein fur socialpolitik – and not without a certain degree of self - interest. the bundesbank considers science and research to be fields of great importance, since the work of central banks is today – more than ever – research and knowledge - based. time and again, research work has been the starting point for central bank policy decisions. conversely, problems we are currently witnessing in the central banks ’ various areas of operation stimulate new research projects. moreover, central banks offer an attractive research environment. i am therefore convinced that a close exchange with research institutions and universities benefits all concerned. the bundesbank maintains contacts and works together with a wide range of institutions and academics at the goethe university. one such example is the institute for monetary and financial stability ; it is financed by the monetary stability foundation, which in turn is run by the bundesbank. but cooperation also takes place on a less formal level, for instance with the center for financial studies and the graduate school here in frankfurt, to name but two examples. 2. lessons from the crisis – comments on the g20 agenda the topic of this year ’ s congress is “ the order of the world economy : lessons from the crisis ”, and the scope of the programme demonstrates the range of the related questions and answers. what are the right lessons to be learned from the crisis? this question was the subject of debate even before the first escalation of the crisis, namely the collapse of lehman brothers in september 2008. initially, it was thought by more than just a few that technical improvements in financial market regulation – notably concerning the securitisation market – would be a sufficient response to the crisis. however, when the most severe global economic crisis in decades took hold in the autumn of 2008, two points became