easy solutions. many of them require significant and often painful adjustments at the national level, and in a world divided by nation - states, there is no natural constituency for the global economy. at the same time, the global crisis has shown that the global economy as an entity is more important than ever. the global crisis has taken a devastating toll on global growth and welfare. in their painstakingly researched book, “ this time is different : eight centuries of financial folly ”, kenneth rogoff and carmen reinhart show how over eight hundred years, all financial crises can be traced to the same fundamental causes as if we learnt nothing from one crisis to the next. each time, experts have chimed that “ this time is different ” claiming that the old rules do not apply and the new situation is dissimilar to the previous one. it will be too costly for the world not to heed this lesson. we should cooperate not only to firmly exit from the crisis, but also to ensure that in resolving this crisis, we do not sow the seeds of the next crisis. before i finish, i want to compliment cbsl for its significant contribution to the growth and development of sri lanka. over the last 60 years, cbsl has acquired a great reputation for professionalism, integrity and sense of purpose. moving forward, as central banks of emerging economies, both rbi and cbsl have their tasks cut out for them. we need to learn from the best in the world, but adapt our learning to the demands and culture of maturing emerging economies. we need to be constantly pushing the envelope, be at the frontiers of domain knowledge, oftentimes reinvent it, but all the time remain sensitive to the core concerns of an emerging economy. on behalf of the reserve bank of india, i want to wish governor cabraal and the management and staff of cbsl all the very best in their endeavour towards growth and development of sri lanka. bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches

consensus survey, at the june meeting of the mpc, the forecasts for brent crude for 2006 ranged from us $ 56 to us $ 67 per barrel, and the range for 2007 was us $ 46 to us $ 64. according to the latest reuters consensus survey, the range for 2006 is now between us $ 63 and us $ 72 per barrel, and for 2007 the range is between us $ 53 and us $ 75 per barrel. this indicates the enormous degree of uncertainty even among institutions that put a lot of effort into forecasting the oil price. we can take advice from the market, but whose advice do we take in this instance? the average or ‘ consensus ’ is not necessarily superior to any of these individual forecasts. some central banks simply look at the oil futures prices, rather than trying to predict the impossible. but as we all know, the futures curve shifts continuously as current prices change. all it tells us is what today ’ s price is, and what the implied price is over the next few months on the basis of a risk - free interest rate and, storage costs. a sudden incident in nigeria, iraq or iran, or a new tropical storm system, for example, will suddenly change both the spot and futures prices. similar reasoning can be applied to forward rates in the currency and interest rate markets. these change almost continuously as new information is absorbed by the market. the fras for example change every time there is a change in the exchange rate, because of the expectation that this could lead to a change in interest rates. as most studies show, even though forward rates, whether currency, commodity or interest rates, are supposed to be unbiased predictors of future spot rates, they are nevertheless not very good predictors. this is the uncertain environment in which we as the central bank have to conduct monetary policy. clearly, we cannot change monetary policy on a daily basis. we have to take a forward - looking, longer - term perspective on the basis of ever - changing data and events, news and surprises. while we can rely on the market for some information, in the end we have to make the decisions on the basis of our judgement. the collective view of the market helps us to make as informed a judgement as possible. 3. should the bank follow the market in setting interest rates? so far i have considered the issue of the flow of forward - looking data from the market to the bank. as i noted earlier, there is a strong case for