your objective. but we should go beyond a static view of brainard ’ s principle [ which focuses on one single small step ] a dynamic view would include the time dimension and consider how to manage and communicate a sequence of incremental steps. 2. our collective challenge facing divergence : combining independence and co - operation the global economy continues to expand strongly but we are now seeing a strong divergence in performance. we have used a lot in the latest imf - weo forecasts, the nice french word « plateau » to describe global growth. but this “ plateau ” is not even : a strong acceleration in the us, even if it is temporary and fragile, offset by a moderation in growth in the rest of the g7. some prominent emerging market economies are either expected to slow down rapidly or record only modest growth. in short we are moving from synchronized growth to economic divergence. in many cases, this divergence reflects differences in the economic cycle and idiosyncratic shocks. more worryingly, from a systemic point of view, however, is that some countries might be suffering from the ongoing rise in us interest rates. helene rey ’ s famous paper in 20133 argued that floating exchange rates are not sufficient to give countries independence from us monetary policy if they have an open capital account. if the trilemma is in fact a dilemma, then countries will have to choose between monetary independence and closing their capital accounts. i would contest the generality or starkness of her dilemma. for example, i think the euro area can determine its own course. our asset purchase programme has contributed to a spread exceeding 250 basis points between the 10 year yields in the us and in germany. likewise, the gap between policy rates in the us and the euro - area is the widest since 2009. more technically, an estimated taylor rule for the euro area that includes us monetary policy as one of the explanatory factors finds only a very modest co - movement between the two. countries instead seem to be arranged along a continuum, with some exhibiting total independence at one end to those with exchange rates pegged to the us dollar at the other. countries don ’ t have to choose one of the two polar positions but can pick an intermediate position. for example, putting some temporary restrictions on cross - border movement of capital could give some but not complete independence of monetary policy. but is there more that we can do to manage the tensions created by these economic 2 / 3 bis central bankers

to finalise and stabilise basel iii, not to open a new basel iv. the insurance sector has not been left out. the entry into force of the european regulatory reform solvency 2, also on 1 january, marks a profound break. we all know that “ solva 2 ” may still be improved ; but it is a significant step forward. in this respect, it is important that all institutions continue their efforts to improve governance and enhance the quality of estimates and data submitted to supervisors, in order to ensure an adequate monitoring of risks, in bis central bankers ’ speeches particular those linked to the persistence of very low interest rates. at the international level, other challenges lie ahead, notably the definition of systemic groups – it must be similar on both sides of the atlantic, like you i am sensitive to this –, harmonised capital requirements and resolution strategies. however, the soundness of the financial system does not depend solely on prudential regulations. it also depends on the confidence that economic players and the public, households and businesses, have in their financial system. in this respect, the efforts of financial institutions to protect their clients are essential. in 2016, what is needed is a firm implementation of the eckert law on dormant bank accounts and unclaimed life insurance policies, and greater freedom of choice of loan insurance on real estate loans. and, of course, more than ever, we need to step up the fight against money laundering and terrorist financing. new measures have already been taken, some are being strengthened. i expect from financial institutions – both insurers and banks – an exemplary participation in this fight. i know that they fully agree to the principle, but they must now carry it through in their daily management ; it is in your interest as compliance risk has become as vital, as strategic, as credit risk. may your institutions be strong on both fronts ; may our country be as involved in the economic battle as in the fight against terrorism, with the contribution of all of us ; and may each one of you remain vigilant and active, yet as serene as possible in 2016. thank you for your attention. bis central bankers ’ speeches