the question of tltros will need to be considered. in the face of uncertainty, one often hears reference to the celebrated brainard 1 ‘ conservatism principle ’ ( as reinterpreted by alan blinder 2. this is not, as the impression is sometimes given, a general warning to move cautiously when the world is uncertain. the brainard ‘ conservatism principle ’ says only that you should move cautiously if you are uncertain about the effect of your policy instrument on your objective. but we should go beyond a static view of brainard ’ s principle ( which focuses on one single small step ) : a dynamic view would include the time dimension and consider how to manage and communicate a sequence of incremental steps. 2. how can we collectively respond to global tensions? there are increasing tensions in the global environment, starting with protectionism. beyond the direct trade policy shock resulting from a rise in import tariffs, two factors at least may amplify the decline in global gdp : a decline in investment demand caused by firms ’ falling business confidence due to uncertainty, and a rise in the financing cost of capital due to an increase in actual or perceived borrower risk. according to banque de france model estimates, the negative impact on gdp of higher import tariffs is 2 to 3 times larger when we account for these indirect channels. and this increase in uncertainty can produce front - loaded negative effects, even before the effective implementation of protectionist measures. that said, protectionism is first and foremost a negative supply - shock, with stagflationary effects. as such, the adverse effects of protectionism cannot and should not be accommodated by monetary policy. in spite of protectionist threats, the global economy continues to expand strongly, at 3. 7 % this year. we have used a lot in our latest imf meetings, the nice french word « plateau » to describe global growth. but this “ plateau ” is not even : the strong acceleration in the us, even if it is temporary and fragile, is offset by a moderation elsewhere. in short, we are moving from synchronized growth to economic divergence. consequently, countries might be suffering from the ongoing rise in us interest rates. helene rey ’ s famous paper in 20133 argued that floating exchange rates are not sufficient to give countries independence from us monetary policy if they have an open capital account. if the trilemma is in fact a dilemma, then countries will have to choose between monetary independence and closing their

a reliable global financial safety net before the next crisis and co - ordinate its different layers. this should include an “ imf standing liquidity facility ”. the global financial safety net is the best insurance we can get against the risks created by economic divergence and it comes at a limited cost. * * let me conclude by quoting voltaire, who wrote in 1770 : “ doubt is an uncomfortable condition, but certainty is a ridiculous one. ” 4 in these times of doubt, we as central bankers should be predictable without being pre - committed – or, as voltaire would say, we should give clarity without pretending to certainty. this is precisely the objective of governing council of the ecb : we are committed to give as much clarity as possible ; clarity, not certainty, which is neither possible nor desirable. thank you for your attention. 1 brainard, w. ( 1967 ), « uncertainty and the effectiveness of policy » the american economic review, vol. 57, no. 2, papers and proceedings of the seventy - ninth annual meeting of the american economic association, may, pp. 411 – 425. 2 blinder, a. ( 1999 ), central banking in theory and practice, the lionel robbins lectures, mit press, cambridge massachusetts. 3 rey, h. ( 2013 ) “ dilemma not trilemma : the global financial cycle and monetary policy independence ”, jackson hole conference proceedings, kansas city fed. 3 / 4 bis central bankers'speeches 4 letter to frederick william, prince of prussia ( 28 november 1770 ). 4 / 4 bis central bankers'speeches