euro area and avoid passively importing financing conditions from abroad through policy spillovers to interest rate expectations and long - term interest rates. we have the necessary autonomy to steer financing conditions in a way that reflects the differences between the euro area and other jurisdictions. we can reconcile these two objectives – factoring in spillovers but tailoring our policy to domestic conditions – if we calibrate our policy appropriately and communicate our reaction function clearly. our measures need to be calibrated in such a way that they achieve the appropriate domestic stance. to use a metaphor – if outside temperatures start falling after a period of hot weather, we have less need for air conditioning because temperatures inside will gradually cool, too. if we then apply this approach to our current situation, when calibrating our measures we should consider the restrictive impulse coming from the global tightening and from the vulnerabilities that are emerging in the financial sector abroad. the clarity of our communication is also crucial, especially in view of the current financial tensions. in order to communicate our policy intentions clearly and consistently at a time when we must remain datadependent and adapt to new developments, we need to set out a clear reaction function and stick to it. accordingly, in our latest monetary policy statement we emphasised that “ the elevated level of uncertainty reinforces the importance of a data - dependent approach to our policy rate decisions, which will be determined by our assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation, and the strength of monetary policy transmission. ” conclusion let me conclude. a string of shocks has created uncertainty for economies around the world. while the effects of some of these shocks are starting to unwind, it may be some time yet before we see volatility in activity and prices subside, and a new equilibrium settle in. notably, my remarks today have focused on the current economic situation. but we may well see longerlasting changes to economic structures as supply chains are reconfigured to increase resilience to global shocks and align with shifting geopolitical strategies. in the meantime, monetary policy must perform a difficult balancing act. faced with an exceptionally complex environment, we need to acknowledge the uncertainty prevailing in the economy. and we need to continuously assess the combined effect of our different policy instruments, the risks of non - linear effects and the spillovers from policies adopted elsewhere. this means our monetary policy should be data - dependent and adaptable. and it

radovan jelasic : serbia against the economic crisis speech by mr radovan jelasic, governor of the national bank of serbia, in a meeting of top officials and leading businessmen themed “ serbia against the economic crisis ”, belgrade, 9 january 2009. * * * your excellencies, ministers, ladies and gentlemen, i am grateful for the invitation to attend this meeting and hope it will, if not resolve, then at least contribute to improved understanding of both current events and possible responses to the challenges our economy and the overall serbian society are now facing. allow me to begin by emphasizing the following four items of concern : 1. the level of disruption in international economic relations is unprecedented since ww2. there is no institution, no scenario or study which offers a ready made solution to the current crisis. 2. nobody, and absolutely nobody, can tell how long the crisis will last nor how deep the disruptions will cut into the tissue of the world economy. this fact should be born in mind by all decision makers when deciding on any measures, either those relating to the use of foreign reserves or measures involving changes in the exchange rate for the dinar! 3. to err is human, especially when the problem at hand and the urgency of quick response are so paramount. but it is also of ultimate importance to admit one ’ s mistake and to adopt corrective measures as the market is quicker than ever in dealing punishing blows for any mistake! 4. of course, we need to face up to the reality, the reality which in serbia is most commonly termed “ harsh ”. this time, though, this attribute is more than applicable, but should not be used as an excuse for us not to confront the reality. both the exchange rate of the dinar against the euro and the current movements in prices are the “ blueprint ” of economic and political reality in serbia and beyond. naturally, we may blame most of such problems on the movements abroad, but i hope we all agree on one point at least – movements in prices and the exchange rate depend heavily on the type of measures we undertake in response to internal and external challenges. and the challenges have never been so numerous! what with the recent gas crisis and its fallout on both prices and the exchange rate in serbia! out of the blue, we are hit by rising prices of coal and wood for heating and there are no electricity heaters in the market even if your life depended on it. that is what constitutes