imf figures, growth among the non - industrial economies appears to have increased to about 5 - 1 / 4 percent in the decade beginning in 1997, compared with growth of 3 - 3 / 4 percent in the previous ten years. growth in the united states has also moved slightly higher over the two periods, from 3 percent to 3 - 1 / 4 percent. however, growth in the other industrial economies has softened, to less than 2 - 1 / 2 percent in the recent decade from more than 3 percent in the previous one. this decline reflects slowing in some of the larger economies - - japan, germany, italy, and the netherlands - - as well as the effect of the asian crisis in 1997 on newly industrialized asian economies. 2 to me, it is axiomatic that monetary credibility, by reducing the level and variability of inflation, lays the foundations for stronger and more - sustained economic growth. in my remarks today, i want to discuss anecdotal and academic evidence for the relationship between monetary policy credibility and economic growth and to do so in two segments : first, the link between monetary policy credibility and inflation performance and, second, the link between inflation performance and longer - run economic growth. before proceeding, i must indicate that the views i am about to express are my own and do the non - industrial economies are those designated by the imf as " other emerging market and developing economies. " according to the imf, cpi inflation for that group has fallen from an average of nearly 57 percent in the 1987 - 96 period to an average of 7 - 1 / 2 percent in the 1997 - 2006 period. imf classifications put the newly industrialized asian economies of korea, taiwan, hong kong, and singapore among the advanced economies. 1 / 5 not necessarily reflect the views of other members of the board of governors or the federal open market committee. monetary policy credibility and inflation performance outcomes does monetary credibility help secure lower inflation, less - variable inflation, and inflation that is less sensitive to shocks? low and stable inflation must start with sound policy - - that is, policy that keeps output near potential and offsets shocks to supply and demand appropriately. but beyond that, common intuition and numerous academic journal articles, a few of which i will discuss shortly, suggest that credibility can greatly enhance the virtues of sound policy. when the central bank is viewed to be both committed to and effective at keeping inflation contained, inflation expectations will tend to be anchored. and so long as the central bank pursue

lars nyberg : the esrb – reflections after 9 months of operation speech by mr lars nyberg, deputy governor of the sveriges riksbank, at norges bank ( central bank of norway ), oslo, 27 september 2011. * * * the financial crisis that started in 2007 – 8 exposed serious weaknesses in the regulatory system. firstly, it turned out that the banks had too little capital and that the quality of that capital was not good enough. furthermore, issues of liquidity had largely been neglected by regulators. all this has been addressed by the basel iii compromise, which is to be slowly implemented over the years to come – too slowly in the view of some countries, too quickly according to others. secondly, the crisis revealed some embarrassing weaknesses in the eu framework for financial stability. the quality of supervision varied substantially between countries and coordination within europe was insufficient, to say the least. perhaps even more importantly, the concept of macro - prudential supervision ( i will return to this concept in a while ) was largely unheard of. to address these issues, the commission, in late 2008, set up a group ( where i had the honour of being a member ) led by jacques de larosiere with the mandate of presenting a roadmap for strengthening the european supervisory framework. the group delivered its report in march 2009. one of the main ideas was the creation of a new institution, which eventually came to be called the european systemic risk board and which is my subject for today. thirdly, the crisis made it apparent that the framework for the resolution of failing banks was grossly inadequate. although steps have been taken to address this question in several countries, a lot of issues remain to be solved, particularly relating to cross - border failures. but this is not for today ’ s discussion. the eu ’ s financial trilemma the core of the challenge facing the eu is conceptually quite simple. in europe, we have built a framework based on the logically inconsistent idea of having one single market controlled by 27 sovereign nations. from a financial stability point of view, this is definitely no recipe for success. on the contrary, it is a source of coordination problems and conflicts of interest among the eu countries. this challenge has been described by professor dirk schoenmaker as the “ financial trilemma of europe ”. we have three goals – financial stability, integration, and national sovereignty – but only two of these can be reached. figure 1 bis central bankers ’