##ia are systematically related to economic fundamentals. modelling them, however, requires nonlinear economic frameworks. similarly, we might possibly need nonlinear techniques to answer the question how policy should deal with really large shocks. linear models may give sufficiently accurate answers for dealing with small to medium - sized shocks, but if economic relationships are essentially non - linear, then such models may make considerable prediction errors in a situation where large shocks carry the economy far away from a state characterised by “ average behaviour ”. for all these reasons, it seems important from a policy perspective to develop and employ non - linear modelling and estimation techniques. iv. concluding remarks to sum up, over the past decades, tremendous progress has been made towards making monetary policy more of a science. undoubtedly, this has contributed to enhancing the effectiveness of monetary policy. at the same time, there is still room – and indeed a need – to further advance the scientific elements of monetary policy - making by addressing a number of conceptual, methodological and empirical challenges. some of these challenges are a consequence of the nature of the economic system and the uncertainty surrounding its evolution over time. the economic environment is continuously changing and at fast pace as a result of the actions of economic agents. technological advances, financial innovations, the process of globalisation, even changing preferences, are influencing the structure and functioning of markets and the monetary policy transmission mechanism. monetary policymakers have to take decisions against the background of the evolving economic environment and then face a host of uncertainties. this makes our task challenging – but admittedly also more exciting. moreover, these observations have two important implications for monetary policy. first, the ability to combine “ science and art ” in a well - structured, balanced, prudent and effective way will always remain a key feature of the successful performance of monetary policy. second, in an environment of continuous change and considerable uncertainty, it is essential that central banks provide an anchor of stability and certainty : through their commitment to and delivery of price stability. this conclusion is directly linked to the purpose of this conference, to celebrate the bundesbank ’ s 50 - year - long unwavering dedication to its task of “ safeguarding the currency ” ( “ die wahung zu sichern ” ) as it is stated in the bundesbank act. i am confident that 50 years from now, on the occasion of the 100th anniversary of the bundesbank, a conference can be again be organised to celebrate this great achievement : “ stable money for germany and

quantifying risk were first explored in research units within individual financial institutions, but also in central banks, supervisory agencies, and universities. our contacts with researchers, the work of the research task force, has helped us to gain access to some of the best research being done in risk management. equally important, it helped to translate the results of some of the most sophisticated technical advances into tangible tools for implementing public policy objectives. applied research cannot be conducted in a vacuum, and good research is rarely achieved alone. in that vein, i look forward to continuing a vigorous dialogue with researchers from many institutions as we explore ways to safeguard depositors ’ savings, to ensure prudent risk management in banks, and to secure more stable growth in the economy. i hope that you find tomorrow ’ s sessions to be equally stimulating and enjoyable, and i thank you for your attention this evening.