broke the back of inflation in the late 1970s and early 1980s, and it has been widely used by other central banks. while the discipline provided by stricter monetary aggregate guides became much less crucial once inflation was brought under control, dick ’ s work has continued to provide us with useful reminders of the value of monitoring money. moreover, the only reason that we have some confidence that one - half to two - thirds of u. s. currency is held abroad is because dick ’ s inquisitive mind wondered along such paths as differential seasonality across countries and fish migration. peter also was deeply involved in the monetary aggregates research in the 1970s - so much so that he was willing to go mano - a - mano with steve axilrod on the definition of m1 at the board table losing, of course, but winning the hearts, if not the minds, of his colleagues for his valor. later in his career, peter came up with innovative approaches to policy at the zero bound for interest rates, a potentially critical issue in a period of very low inflation. asset prices asset markets are of particular interest to policymakers as the transmission channel through which movements in money or short - term interest rates primarily affect the economy. because their prices incorporate market expectations for the future, they are also an area in which policy indicators might be found. the huge literature on speculative attacks in exchange markets started with dale ’ s work with steve salant on gold. it significantly influenced the thinking of an intern at the board, one p. krugman, who, in his pre - political mode, extended the thinking to foreign exchange crises. dale ’ s understanding of exchange markets intersected with his understanding of macroeconomics and policy in a number of studies that have tried to inject sense and analysis into discussions of sterilized interventions. dick ’ s work on asset markets includes his seminal work with steve leroy on variance bounds tests on present - value relations. their demonstration that equity prices were excessively volatile relative to what would be consistent with the efficient capital markets model posed a fundamental challenge to the theory of finance and spearheaded a vast literature aimed at improving our understanding of asset pricing and market efficiency. during the 1980s, peter also contributed to understanding in this area through his work on commodity price determination and the indicator properties of such prices for monetary policy. more recently, peter - working jointly with sharon kozicki - has been busy advancing our understanding of bond market dynamics. in a sequence of papers, they

work on the “ framework for strong, sustainable and balanced growth ”. this involved strengthening economic cooperation between countries and better taking into account the potentially damaging effects of national policies on other countries. for example, countries running balance of payment deficits undertake to carry out reforms, while surplus countries commit to stimulating domestic demand. bis central bankers ’ speeches – third, the g20 also started work on reforming the international monetary system. this is naturally a long - term project, but there have been encouraging signs, in particular concerning the international role of emerging market currencies – lastly, g20 countries have fully understood the risk of excessive public debt. all the countries in this situation committed to reversing the trend. * * * it is the combination of short - and long - term national, european and international solutions that will enable us to truly emerge from this crisis. major challenges lie ahead, but they are also opportunities to create a more stable economic environment for the future. thank you for your attention. bis central bankers ’ speeches