d., pesenti p. ( 2006 ) “ would protectionism defuse global imbalances and spur economic activity? a scenario analysis ”, nbew working paper 12704, november 2006. • anglo - saxon countries which are very good at producing financial assets have already shown enormous imbalances, with us current account deficit and housing market bubbles as the headline examples ; • emergence of ( long lasting ) asset bubbles and drop in inflation ( and possibly even emergence of deflation ) are market mechanisms to bridge the asset gap ; • bursting an asset bubble makes asset shortages problem worse ; • while financial markets development moves ahead ( think about large listings in china, improving corporate governance or rapid development of credit derivatives ) it is unlikely that excess demand for assets will be eliminated soon, as it seems to have a structural origin, related to demographics ( aging ), or to higher uncertainty for corporations operating in more competitive global economy in xxi century, which probably explains why profits to gdp ratio is at 40 - years high and investments fail to recover to pre - asia - crisis and pre - dot - com - boom levels it does matter to what view of the world you subscribe, as it dramatically alters the subjective likelihood of competing scenarios for 2007. as pimco michael gomez puts it in september emerging markets note titled “ is it safe? ” 19 : “ em has historically been vulnerable to deteriorating economic and financial conditions in the united states and other developed countries. slower growth, tighter liquidity, and heightened risk aversion in mature markets generally mean lower commodity prices, less capital flows, and higher interest rates for em borrowers - conditions that helped produce some spectacular financial crises in the past dozen years. not a pretty picture, and one that begs the question of what lies around the corner “. however, if asset shortages story is correct, then upcoming us slowdown ( or brief recession according to some non - consensual forecasts ) would likely further increase excess saving ( as fading growth prospects will discourage investment projects and encourage more private saving amid rising uncertainty, only partly offset by higher public dissaving due to automatic stabilizers ), and lower valuation of us equities will make the world supply of assets even more scarce. in such situation us economy having hard times may not necessarily lead to higher risk premia for emerging markets ( as it was the case in the past ) rather any increase in risk premia would be used by investors to enhance returns, spread compression

”, summary of a speech given by toshihiko fukui, governor of the bank of japan, to the japan chamber of commerce and industry in tokyo on 16 march 2006. woodford m. “ for not only do expectations about policy matter, but ( … ) very little else matters. ” – interest and prices : foundations of a theory of monetary policy, princeton university press, 2003. been followed recently by the norgesbank 21. at first ( since 2003 ) the norwegian mpc published its monetary policy intentions only for the next four months in the form of an interest rate forecast interval. last november it went further and started publishing a forecast for interest rates three years ahead in the form of a central forecast ( with two alternative scenarios ) along with a fanchart ). these bold steps made new zealanders and norwegians push the frontier of central banking ahead and set a new benchmark for inflation targeters 22. are we ready to follow? in 2000 mahadeva and sterne measured central banks transparency 23. back then the polish central bank was below the average among inflation targeters. however since then the nbp has made considerable progress. major changes to communication have been introduced such as publication of inflation forecasts, modification of inflation reports and decision statements in order to make them more forward - looking. łyziak et al. have applied the mahadeva - sterne and eijffinger – geraats indices to assess current transparency of the nbp and showed that it has markedly improved 24. nevertheless, we are not resting complacently. there are still ways to go and things to learn. later today marek rozkrut will present results of an empirical study conducted at the nbp 25 showing that central bank communication strategies in the czech republic, hungary and poland exhibit large differences. the czech national bank seems to do a much better job than the other two banks in matching words with deeds. there is also some evidence that pursuance of too many targets under it framework leads to inconsistencies also in central bank communication, as in the case of the hungarian national bank. finally, to those of you, who intend to adopt it in the future let me say one last thing. a standard view is that it should not be introduced unless a number of criteria are fulfilled. as piotr szpunar will tell you in the first presentation, at the time poland adopted it one could claim we were not ready