should, for that reason alone, be left on the back burner. autonomous monetary policy autonomous monetary policy is a kind of “ absorber ” of economic shocks. it is meant to reduce their impact and smooth the economic cycle. it prevents an economic contraction being borne by the unemployed and those on low incomes more than is necessary. certainly, the more flexible is your economy ( in terms of public finances, the labour market, and so on ), the easier it is to cope with shocks and the less monetary policy is needed. however, the case of the eurozone shows how tricky it is when the absorber in the form of monetary policy is switched off and nothing replaces it. the shocks are bigger and hurt more. listeners themselves can answer the question of whether the labour market and labour law are likely be made more or less flexible ( and dismissals made easier ) in the future. in doing so, they will answer the question of whether there will be a need in the future for more or less domestic monetary policy in the czech republic, a country whose conservative population is so averse to upswings and downswings. 1 / 3 bis central bankers'speeches the “ convergence trilemma ” the standard “ monetary trilemma ”, which you know very well ( a country cannot simultaneously have a fixed exchange rate, an open capital account and autonomous monetary policy ), is accompanied in a converging economy of our kind with something i call the “ convergence trilemma ”. no country can simultaneously have high convergence growth, a fixed exchange rate, and low macroeconomic imbalances, be they internal or external. in our case, catching up with our wealthier, low - inflation western peers means a long - term tendency for our currency to appreciate. this is hardly consistent with a permanently fixed exchange rate. the paradox of the eurozone the eurozone paradox is that the best possible members of the club are the countries that are so stable themselves in monetary and economic terms that they don ’ t need “ to buy in stability and credibility ”. such countries have fewer and fewer reasons to adopt the euro. conversely, the more a country begs to have the euro, the bigger the problem it will represent. this explains why almost no one is conducting a euro debate in sweden, even though it does not have a derogation and many would like to see it in the eurozone. canonically, the same goes for us : either we can continue to stabilise ourselves

rate and at the end of the same day to deposit the same money at the european central bank being paid the discount rate, which is 1 percentage point less, but the spread between the short - term money market rates and the key policy rate still persists. magnitude of the commercial banks ’ position compared with the european central bank shows how huge the uncertainty has been. only restoration of confidence about solvency and financial stability among commercial banks can most probably solve this problem. the third frontier we are concerned about is connected to the emergency liquidity assistance. under standard circumstances central banks provide liquidity to commercial banks only. in case of an urgent need a commercial bank may ask the central bank for an emergency credit. what we see in the united states today is an attempt to extend this emergency assistance beyond the banking system and provide liquidity against collateral to non - banking firms. on one hand, one understands the effort of the federal reserve to provide funding also to the non - banking sector of the economy when the traditional channels are freezing. on the other hand, the federal reserve is effectively printing money against collateral with uncertain value and there are concerns when and how the federal reserve will close and null these operations to avoid potential inflationary consequences. it is argued that similar operations should be done rather by the ministry of finance against issuance of the public debt. the federal reserve is probably aware of the delicacy of current situation and chairman ben bernanke recently tried to assure the economic society that the federal reserve is prepared to close the respective funding windows when necessary. 2 however, a question that remains to be answered is how this will work in reality? ladies and gentlemen, instead of a conclusion let me please assure you that in spite of all the frontiers we face today the czech national bank does its business as usual and we will do whatever is necessary to meet our ultimate objective of price stability. finally, i would like to wish to all of us for the year 2009 to be less challenging than the previous one. see speech of chairman ben bernanke : “ crisis and the policy response ” at the stamp lecture, london school of economics, london, on january 13, 2009.