early 1980s. but, at the present juncture, the question we should be asking ourselves is not so much “ why have we returned to price stability? ”, but rather “ how did we lose it in the 1970s? ”. one element of the explanation that comes immediately to mind is the misconception that there is a permanent trade - off between inflation and output. we are indebted to academic research for showing that the attempts to exploit a trade - off between inflation and unemployment eventually only lead to higher inflation. it thus re - established a firm basis for the concept of the long - term neutrality of money. indeed, this is a perfect example of an academic insight that has become a deep - seated principle of central banking. i have mainly spoken to you about the important input that economic research provides in central banking. let me briefly touch upon the other leg of this exchange, from policy to science, which is by no means less important than the previous one. by facing the challenge of decision - making in real time and in the real world, policymakers continuously uncover a wealth of new intellectual problems that had not been foreseen by science. moreover, policymakers have a better knowledge of the institutional constraints affecting policy and are therefore able to transmit a sense of realism to economists who analyse monetary policy issues. an additional, less obvious, but very important aspect of this exchange is that policy - making introduces a form of discipline in the science of monetary policy by placing a premium on analytical results that prove to be robust across different approaches. a central bank needs to be very cautious about “ jumping on the bandwagon ” of any new but untested paradigm that academic researchers, or other observers, may provide. here i follow friedrich hayek and “ confess that i prefer true but imperfect knowledge, even if it leaves much undetermined and unpredictable, to a pretence of exact knowledge that is likely to be false ”. let us now engage in the fascinating and fruitful synergy between academics and central bankers. i wish you a very interesting and stimulating discussion and i look forward to witnessing the results.

yves mersch : reaching for perfection – building the market infrastructure of tomorrow opinion piece by mr yves mersch, member of the executive board of the european central bank, published in eurofi magazine, 7 september 2016. * * * last year the eurosystem launched target2 - securities, or t2s, a pan - european platform for securities settlement in central bank money. this is a major advancement in europe ’ s securities infrastructure, allowing banks to carry out cross - border securities transactions in the same way as they make domestic transactions, and at lower cost. it also enables banks to manage their collateral more effectively by creating a single, centralised pool of liquidity. with t2s, banks can move collateral quickly and easily to where it is needed, rather than it getting blocked in local markets where it is not being used. t2s is just one part of the infrastructure that forms the backbone of europe ’ s financial market. the eurosystem has been working hard over the last decade to ensure this infrastructure is sound and efficient. what ’ s more, it forms the foundations of the capital markets union ( cmu ) by providing the technical network through which capital can move freely around the eu. the free movement of capital means greater access to financing for europe ’ s businesses and more diversified investment opportunities for investors. continuing with the example of t2s, this platform makes it much easier for a bank based in portugal, for example, to buy securities in latvia and to use them as collateral for transactions in france. t2s therefore makes it technically and physically possible to achieve the objectives of cmu : mobilising capital wherever it is found in the eu. moreover, the eurosystem ’ s work to build a strong financial market infrastructure has been the trigger for regulatory change in europe. for example, as t2s was being developed, it became clear that greater harmonisation across borders would amplify the benefits of the securities settlement platform. t2s has thus driven an extensive harmonisation agenda, bringing together the market to align rules and practices. the csd regulation laid down harmonised rules and requirements, which have created a more level playing field in the post - trade arena. despite all the work done so far, new challenges are constantly emerging that require the eurosystem to adjust and enhance the financial market infrastructure further. even a safe and efficient market infrastructure can be enhanced and complemented with additional functionalities and features. for example, as digitalisation changes