##pinned this trend to argue that a new capitalist system would progressively emerge, with the relevance of nation states as economic actors dwindling in importance. in contrast, other observers saw the growing internationalisation of the world economy as part of a broader and longer - dated trend where sharp intensifications in trade and financial exchanges underpinned by growing economic liberalism were not without historical precedent ( for example during the period ranging from 1870 to 1913 ) 5. these observers were thus more bullish as regards the ability of nation states to retain their economic power going forward, consolidating this inter alia through strategic alliances in economic blocks6. in spite of these nuances, the common thread between the two views was that the underlying economic forces were seen as inevitable in the international ( or global ) domain. complementarities between globalised economic performance and policymaking second, following the broad acceptance of the premise that the globalised world would be durable in nature, academics and policymakers devoted their attention to fleshing out the practical implications of globalisation in different policy environments. insofar as monetary policy was concerned, the debate was broadly captured by the relative weight of improved policymaking versus globalised factors in accounting for successful economic outcomes. a first dimension in this regard was backward looking in nature and stemmed from the sharp reduction in the variability of both inflation and output during the 1990s. this phenomenon, which became known as “ the great moderation ”, coincided with both the intensification of according to wto data, the average growth of world merchandise export volumes per annum was 15 % from 1960 to 1990 inclusive, as compared to average real gdp growth per annum of 8 % over the same period. according to unctad data, the world stock of outward fdi increased from usd 564 billion in 1980 to usd 1763 billion in 1990. see the end of history and the last man, book by f. fukuyama ( 1992 ). see the borderless world ( 1990 ) and the end of the nation - state ( 1995 ), books by k. ohmae see for example globalisation, history and development : a tale of two centuries, article by d. nayyar ( 2006 ). the author notes that export shares in gdp for selected industrialised countries ( e. g. uk, germany, japan ) were broadly comparable in 2000 relative to 1913, and that the relative increase in export shares to gdp for these same countries between the periods 1900 – 1913 and 1973 –

peter praet : monetary policy lessons from the financial crisis – some remarks dinner speech by mr peter praet, member of the executive board of the european central bank, at the snb research conference, organised by the swiss national bank, zurich, 24 september 2015. * * * it is a pleasure for me to share with you some thoughts on the topic of this conference. let me start with a word of caution. i think we are not yet in a position to draw firm lessons. the final verdict on many aspects of the crisis and the way policy - makers, including central bankers, reacted to it – both globally and in their respective jurisdictions – is still out. therefore, somewhat less ambitiously, please allow me to offer some remarks on the conference topic. based on my own experience, the overarching challenge that was faced by major central banks in terms of their response to the recent financial crisis can be captured with two insights. first, when the crisis intensified at a global level, we faced a trade - off we had not seen for a very long time, namely how to prevent the meltdown of the financial system without causing undue harm to the incentive constraints that are of vital importance for the functioning of market - based economies. the pre - crisis macroeconomic debate had spent considerable time and effort explaining that negative supply side shocks could present central bankers with a very difficult decision : whether to stabilise inflation at the cost of slowing growth further, or be more patient at bringing inflation back to target at the cost of destabilising inflation expectations. we thought that a situation like this was the worst scenario for central bankers. therefore, when we finally faced the post - lehman brothers meltdown and the different – and far more serious – decision of handling panic against preserving incentives, the required experience on how to deal with it had, to some extent, been lost. we could consult history books – the recurrent financial crises of the 19th century were regularly haunting central bankers – but not macroeconomic textbooks. second, while a global meltdown had successfully been prevented, a second type of tradeoff emerged, which is typical for balance sheet recessions. 1 what essentially had happened is that banks, emerging painfully from a liquidity crisis, had started to deleverage actively in an attempt to structurally reduce liquidity needs by shedding excess exposures. the deleveraging was an additional downside force contributing to the slump. in this situation, a central banker is again torn between