system in which they operate. and such independence depends chiefly on their reputation. a central bank ’ s reputation is based on qualities such as accountability, transparency, and proper management of its own operations, as well as on its ability to make good choices and good decisions. as its mandate broadens, the likelihood that its actions will be seen as the right ones lessens. we are hardly able to cure all the ills of modern economies, let alone whole societies. so, we should keep on practicing restraint, both in the scope of the mandate we wish for, and in our communication on more general issues lying outside our direct responsibilities and outside the time frame over which we can influence the position of the economy in the business or financial cycle. such restraint also enables us to communicate convincingly and effectively without needing to resort to strong words. at a time when even the central bank ’ s core mandate – monetary policy – has become quite a challenge to implement, such quality of communication is of utmost importance. as we head toward the zlb, as we ponder or carry out unconventional monetary policy measures, and as we address the consequences of similar moves made by our colleagues, we must be sure that our words are read carefully and taken seriously. in such a world, we must also carefully scrutinize whether we are overestimating our ability to forecast the fundamentally uncertain economic system and identify its crucial elements, and bis central bankers ’ speeches consequently whether we are overcommitting ourselves in our efforts to reduce the uncertainty felt by economic agents. because if we are, the instant effectiveness of some forward - looking commitments and guidance that should never have been issued at all, will give way to a much longer - lasting decrease in our ability to guide the markets in the future, and thus to an increase in the risks faced by each and every economic agent. our mandates and institutional frameworks may develop, but our primary objective of assisting economic development and growth by preventing abrupt changes in economic indicators – be it the price level or broad measures of the stability of financial systems – will very likely stay unchanged for quite some time to come. generally speaking, the goal of central banks is to provide some certainty in fundamentally uncertain economies, the uncertainty being based largely on the workings of their monetary systems. in pursuing this goal, we will need three things. first, we will need external recognition of the importance and usefulness of our independence. second, we will need to nurture good relations with our colleagues ; we have made

switzerland. a strong central bank is now a firm anchor in the economy. over the next six years, monetary policy should be more restrictive, or rather interest rates should be higher, than in the, say, six to ten years before covid. we need to motivate people, firms and also the government to save. it's the only road towards less debt. this is the first policy for a strong koruna. second policy for a strong koruna – fiscal policy inflation was last at the cnb's target in 2018, a period when public finances were in a surplus. in 2017, the public finance surplus in the czech republic was 1. 5 % of gdp. in 2018 it was 0. 9 % of gdp and in 2019 it was 0. 3 % of gdp. that is no accident. 2 / 4 bis - central bankers'speeches defeating inflation is conditional on monetary and fiscal policy coordination. 6 the key question is : will the higher inflation observed after covid be persistent? the answer depends not only on monetary policy, but also on the government's credibility regarding its willingness to stabilise debt. if fiscal policy generates rising deficits, monetary policy alone cannot ensure permanently low inflation. if the central bank increases rates, it will cause a recession. in an entitlement economy, the government will attempt to compensate people for the recession with accommodative fiscal policy. this in turn will fuel inflation. that's why i have said after each monetary policy meeting at which we have left interest rates unchanged that reducing the country's debt is another key condition for lowering inflation. orderly finances are the road towards a good rating, towards credibility of the country as a whole and towards a strong koruna. third policy for a strong koruna – long - term growth policy monetary and fiscal policies endeavour to dampen fluctuations in the business cycle. in the last three years, they have been focused mainly on finding short - term solutions to the covid and energy crises. however, we must not forget the third variable in the equation, which i would call long - term growth policy. the long - term growth of an economy depends on its production capacity, or on supply, that is, on people and their hard work and on the capital and technology in the economy. i want people to save so that capital is accumulated for investment. i want wage growth to be in line with growth in labour productivity. 7 this will increase supply, the country '