there is considerable uncertainty about both their magnitude and persistence. part of this uncertainty can be addressed by distinguishing transitory from permanent productivity shocks. the ecb ’ s focus is on the inflation effects of productivity shocks. the impact on inflation depends on supply and demand effects : • as regards supply effects, negative productivity shocks contract – at least temporarily – the supply of goods or financial services and thereby tend to increase prices. • d emand effects work through the wealth channel. if economic agents perceive a negative productivity shock to be permanent, they will feel poorer and reduce their spending in proportion to the perceived decrease in wealth. if, however, they perceive this shock to be transitory, economic agents ’ perceived wealth will remain more or less unchanged and the fall in demand will be muted. this suggests that • transitory negative productivity shocks will be associated with some degree of excess demand, pushing up inflation, • whereas permanent negative productivity shocks could be associated with either excess supply or excess demand, depending on the perceived decrease in wealth. is what we are experiencing right now a negative shock to financial sector productivity? and, if so, is it permanent? it is not easy to answer these questions because of the high level of uncertainty we face. confidence in the private sector has been heavily affected, in particular after the collapse of lehman brothers, suggesting that the decrease in wealth perceived by agents around the world is very large. what can central banks do in this situation of heightened uncertainty? the short answer is : reduce uncertainty by providing a firm anchor for private sector expectations. this is precisely what the ecb has been doing. and this leads me to my third point : monetary policy in turbulent times. our monetary policy strategy is rendering us very valuable services in this respect. in particular, the monetary analysis helps us to obtain a robust assessment of the balance of risks to price stability and, ultimately, to adopt the monetary policy stance that is appropriate in order to fulfil our mandate. in these challenging times, core principles derived from the cumulated experience of central banks over a very long period of time have been the firm basis that has guided the monetary policy of the ecb. allow me to briefly mention the most important of these principles : • first, monetary policy must be given a clear and unambiguous mandate to maintain price stability. • second, the central bank must be credible in its commitment to deliver this objective. • third, the central bank must be independent of political influence. • fourth, so as to

we begin to forget the storm we endured. yet it is this very situation that gives us the breathing room we need to take stock of what we've learnt. that is why we are here today. in hindsight, we were lucky. very lucky. there was no knowing the exact form the crisis would take, yet our economy was resilient to many of the challenges we faced. before, digitalisation was an enabler for innovation ; suddenly, it was a crucial part of saving 1 / 3 bis - central bankers'speeches lives. as we strove to respond rapidly while still basing our responses on sound policies and strategies, the crisis accelerated structural changes we were already in the process of making, along guard rails we had already built. internet penetration was high, and remote work became a viable option for many sectors. our communication systems played a vital role in keeping the nation connected, bridging gaps in a socially distant world. it allowed businesses to pivot, workers to transition seamlessly, and most importantly, essential services to continue without crippling disruptions. the gig economy emerged as an unexpected hero. the dynamic nature of this sector acted as a buffer in maintaining a semblance of normalcy amid the chaos. much was said about our fiscal position, but the steady consolidation over the years allowed us sufficient room to manoeuvre for timely interventions. our sturdy financial sector also stood ready to absorb shocks and provide credit. in short, our earlier policy decisions and structural reforms helped to lead us from a rocky period into the present. and now, we must re - evaluate and refine them for a stronger future. the constant need for structural reforms is no new revelation to any of us who work in long - term policymaking. in my own career, i have battle scars from three crises. one thing for sure is that all of these crises have taken various forms. each time, their impact was blunted by measures that we took earlier to strengthen our fundamentals before the fact, from the financial buffers against the global financial crisis to the diversified, digitalised economy that weathered covid - 19. but a blunted impact is still felt, and it is still painful. with the benefit of hindsight, we can see clear gaps in the design and execution of some policies. for instance, though major shocks will inevitably hurt some more than others, there is room to improve the way we help these people and businesses recover. if we have more holistic