. rather, it means that central banks should take a longer - term perspective which takes into account the future inflationary consequences of such unfavourable developments. and indeed, empirical work pioneered by the bis has found that excessive money and credit growth has significant leading indicator properties for sharp corrections on asset markets and severe repercussions on the rest of the economy. as financial crises increase the volatility of macroeconomic variables such as inflation and growth, and given that monetary policy operates under the traditional loss functions, these results indicate that a more symmetric policy would improve welfare and macroeconomic stability. moreover, it could be argued that the variance of macroeconomic variables itself is not independent of the monetary policy strategy chosen. a more symmetric monetary policy approach to financial cycles therefore has an additional endogenous impact. given the macroeconomic relevance of financial crises, we have good reason to widen our monetary policy time horizon and give low - frequency movements in credit and monetary aggregates more weight in our analytical frameworks and our monetary policy decisionmaking processes. that is not to say that such an approach would eliminate financial cycles altogether. however, in the medium to long term, a monetary policy that followed a more symmetric course would do more to dampen damaging financial cycles than a monetary policy that merely tries to limit damage after the event using aggressive interest rate measures. given that the eye of the current storm is the us real estate market and that the us federal reserve is well known for actively pursuing a risk - management approach, it comes as no surprise that most debates currently focus on us monetary policy. but given the prolonged period of low interest rates in the euro area over the past couple of years, these issues must also be addressed by monetary policy makers in the eurosystem. here, the eurosystem ’ s monetary policy strategy already possesses, in the shape of its monetary analysis, such a stabilising element, which is especially suited for the analysis of long - term developments. the recent financial turmoil has shown that the often criticised monetary and credit analysis has a valuable role to play in monetary policy analysis. mtm and financial developments the relationship between monetary policy and financial markets, however, is by no means one that is of interest to policy makers only in the face of a crisis. developments on financial markets have the potential to modify core economic relationships and are therefore of utmost interest for monetary policy. let me therefore move away somewhat from the recent stress episode to discuss other structural issues related to financial innovations and monetary policy

christine lagarde : dynamic regions at the heart of a strong europe speech by ms christine lagarde, president of the european central bank ( ecb ), at wirtschaftsinitiative frankfurtrheinmain e. v., frankfurt am main, 5 october 2021. * * * first of all, let me warmly congratulate you on the 25th anniversary of wirtschaftsinitiative. johann wolfgang goethe, the great son of frankfurt, once famously said : „ was nicht vorwarts gehen kann, das schreitet zuruck. “ today, as we exit the pandemic, we are finding a world much changed. the trend towards digitalisation has sped up hugely. demand is shifting towards new activities and sectors. a faster green transition has become an imperative. so europe must move forward to avoid going backwards. and it can – in large part thanks to the dynamism and diversity of its metropolitan regions. european regions – like frankfurtrhinemain – can create a shared vision and combine their talents on a broader scale. this can in turn create a launchpad for the whole of europe to rise to the new challenges of today. we all need to adapt and innovate in order to succeed. and just as this is true of regions, so it is true of europe more widely as we recover from the pandemic. frankfurtrhinemain in a united europe over the past few decades, the world ’ s regions have evolved rapidly from predominantly rural to highly urbanised societies. by 2100, some 85 % of the global population will live in cities. europe is no exception. 60 percent of europeans live and work in metropolitan regions and contribute to over 70 % of the eu ’ s growth. as the centres of europe ’ s economic and social life, metropolitan regions are vital for the success, competitiveness and progress of europe and its people. the diversity of europe ’ s 120 metropolitan regions – from porto to bucharest and from naples to helsinki – creates a rich tapestry for europe to compete globally. that diversity is also a crucial source of grassroots innovation. metropolitan regions are fertile ground for a creative, skilled workforce and specialised industry clusters. and these regions can connect with each other, learn from each other and challenge each other. with all of europe – its regions included – facing profound and accelerating change, standing still is not an option. frankfurtrhinemain has clearly demonstrated the ability to keep moving. despite its unusually polycentric