boom episodes that have sometimes been followed by post - boom recessions. these findings are obviously important for the role of money and credit in the monitoring and assessment of financial stability, but they are also relevant for the conduct of monetary policy. a recently expressed view is that a narrow focus of monetary policy on price stability in the short term might pose risks to price stability in the longer run, if the potential consequences of financial instability for long - term price developments are overlooked. the ecb ’ s monetary policy strategy, with its medium - term orientation and the important role it assigns to monetary analysis for assessing mediumto long - term price developments, allows us to address challenges that may arise from financial imbalances and potential instability in the financial markets. monetary analysis can help us to identify distortions and imbalances in the financial system, and the implied potential risks to long - term price stability, in a timely manner. moreover, market expectations of the monetary policy response to these long - term risks to price stability should help to contain evolving financial imbalances and thereby mitigate the vulnerability of the financial system. there is, therefore, no conflict between the conduct of a monetary policy focused on the preservation of price stability over the medium and longer term, and the safeguarding of financial stability. on the contrary, price stability and financial stability should be mutually reinforcing. and the monitoring and assessment of monetary and credit developments contribute to this, which reinforces what i said before : there is “ value in money ”. however, it is worth keeping in mind the implications of the rapidly changing global economy. its structure and functioning is affected not only by ( i ) productivity developments related to technological advances ; and ( ii ) the process of globalisation, but also by financial innovation and the increasing complexity of financial instruments. all these factors have a bearing on the dynamics of the inflationary process and the evolution and information content of monetary and credit aggregates. it is therefore essential that we continue to monitor these developments, and keep our antennas alert for monetary and financial signals that can be of use in assessing medium - to long - term trends in consumer and asset price developments and their potential interaction. needless to say, it is not easy to interpret this information in the context of the ongoing structural changes in the real economy and financial markets that are difficult to identify and measure in real - time. but we have to. i am convinced that the information value that can be provided by money will remain important, but it

– to the extent that they influence risks to price stability. in this respect, excessive exchange rate volatility is not welcome! turning from currency issues to our second topic, competitiveness, i am tempted to use a play on words and ask : “ does competitiveness still have currency? ” my answer to this is definitely yes! competition should not be understood as a zero - sum game, where winners can only gain what losers lose. a competitive environment might lead to situation where both sides are absolutely better off. more importantly, it is the consumers who are the ultimate beneficiaries of competition. competition gives incentives for self - improvement and produces excellence. competitiveness is linked with the creation, diffusion and application of new knowledge resulting in technological progress. and i do believe that there is still room for further improvement when it comes to the euro area ’ s international competitiveness. extensive global imbalances have built up between major economic regions during the last few years. whatever their presumed causes, either overspending or underinvestment in the usa ; or the saving glut in surplus economies, particularly asian emerging markets and oil exporting countries – current account imbalances have undoubtedly amplified the pressure on currencies, with possible harmful consequences for global financial stability. it is clear that all regions involved have to assume their responsibility for ensuring the sustainability of their external and internal balances, and for enhancing their growth potential. however, for the time being it appears that the euro area takes the major burden of this adjustment process. remarks by chairman alan greenspan at the european banking congress 2004, frankfurt, germany ; november 19, 2004 ; http : / / www. federalreserve. gov / boarddocs / speeches / 2004 / 20041119 / default. htm the g7 meeting of finance ministers and central bank governors of this past october, including the president of the ecb, reaffirmed that “ exchange rates should reflect economic fundamentals. as announced, they “ welcome china ’ s decision to increase the flexibility of its currency, but “ stress its need to allow an accelerated appreciation of its effective exchange rate ” 2. earlier in october, the finance ministers of the euro group noted with great attention that the “ us authorities have reaffirmed that a strong dollar is in the interest of the us economy ” 3 and commented that “ the sustainable recovery path ” of the japanese economy should “ be incorporated in the assessment of risks ”. meanwhile “ the euro area is