the edict clearly ignored the economic law of supply and demand and ultimately proved to be unenforceable in the long run. despite this, there were many similar attempts to control prices later through history. the lesson here is that price controls may be effective on a very narrow set of products and services and on a short - term basis, as price controls over a longer run distort market signals and lead to inefficient allocation of goods and services. interestingly enough, this lesson continues to be relevant even nowadays. only a year or two ago, quite some countries introduced various forms of price controls in response to the global energy and food price shocks. that was probably the most pragmatic and feasible short - run policy measure at that moment. there are still some leftovers of price controls around, but we have to make sure not to overuse them. in addition, we used monetary policy, which did its part of the job, and it is still delivering. all in all, inflationary pressures have been abating, and in case we do not face some new shocks, inflation should gradually come down, and hopefully in a sustainable manner, to our medium - term target. 2 / 3 bis - central bankers'speeches we know how important it is that monetary and fiscal policies play hand in hand in order to achieve that objective. we also know how important role monetary authority's credibility plays in this regard. and we should never ever forget that credibility built over many decades can be wiped - out literally overnight. this is just one of the topics we will touch upon later today in our first panel. but before that, let me pass the floor to our co - organizers, or may i say, co - hosts, for their introductory remarks - first, my dear colleague mr. pablo hernandez de cos, governor of banco de espana. thank you, and i wish you a pleasant stay in split and fruitful discussions today. 1 https : / / www. britannica. com / biography / diocletian / domestic - reforms 2 https : / / mises. org / library / edict - diocletian - case - study - price - controls - and - inflation 3 https : / / www. britannica. com / biography / diocletian / domestic - reforms 3 / 3 bis - central bankers'speeches

particular, balance sheet policies have been stimulative by swapping central bank money for assets with duration and credit risk. but over time, if monetary policy continues to withdraw long - dated safe collateral from the market, there is a risk that it has a countervailing effect – i. e. that it exacerbates safe asset hoarding at the long end of the yield curve. as various academics have documented 2, this could eventually put further downward pressure on real equilibrium rates. central banks have responded to this by re - lending their portfolios of securities. but this is only a temporary fix. the first best solution would clearly be for fiscal issuers to generate more safe assets under the conditions outlined above. if this does not happen, central banks may have to use their own balance sheets to satisfy safe asset demand, also at longer maturities. a third complication is that extended use of unconventional measures could come with rising side effects, for instance on financial stability, financial intermediation and international the real neutral rate points to the level of real interest rate where monetary policy is neither stimulating nor restraining economic growth. see caballero, r. j., e. farhi and p - o. gourinchas, 2015, “ global imbalances and currency wars at the zlb ” nber working paper no 21670, october 2015. and caballero, r. j. and e. farhi ( 2015 ), “ the safety trap ”, nber working paper no 19927, february 2015. bis central bankers ’ speeches spillovers. thus far, the benefits of such measures have clearly outweighed their costs, but we cannot rule out a situation where the side effects are such that the negative consequences prevail. when discussing negative interest rates, i have called that tipping point the “ economic ” lower bound, in contrast to the “ physical ” lower bound, where largescale substitution with cash materialises, a point which has clearly not been reached. 3 this could mean a more frequent use of micro - and macroprudential measures to oppose the adverse financial stability effects of very low rates, also in countries affected by international spillovers. it could further accelerate shifts towards non - bank forms of intermediation with the consequences i described above. and it may mean moving towards a regime of greater international cooperation and policy alignment to avoid a situation where the effective lower bound leads to competitive devaluations. conclusion let me conclude.