restraint everywhere, and in order to gain the public ’ s trust, we had to show that the cnb itself was operating properly and responsibly. the salaries of the board members and all board − 1 managers were frozen in 2023. the salaries of other employees increased by an average of 4. 5 %, although the inflation rate for the year as a whole was 10. 7 %. overall, we focused on the bank ’ s income statement and started with operations, as it could be tackled immediately. in 2023, we reduced the number of board − 1 managers from seventeen to fourteen and achieved cost savings in all departments. the number of jobs at cnb fell by 5. 1 % in 2023, representing the first major job cuts at the central bank in 10 years. cost cutting at the cnb during periods of high inflation year - on - year change ( % ) 1, 516 1, 439 - 5. 1 number of job positions number of board – 1 executives - 17. 6 source : cnb wage restraint at the cnb during the high - inflation period in 2023 ( year - on - year change ) inflation 10. 7 % wage growth of bank board members 0 % wage growth of board − 1 level executives 0 % average wage growth 4. 5 % source : cnb in the end, our efforts paid off : inflation expectations began to fall towards our target. and inflation started to decline even in year - on - year terms. by the end of 2023, we were able to lower interest rates slightly because we were confident that inflation was heading towards our target in 2024. this chart shows the results. inflation and inflation expectations are close to the target and real interest rates are positive. when low inflation was announced, i made a public statement on our website and sent a letter to cnb staff telling them that they should be proud of working together for the good of the country. however, i pointed out that there would be no celebrations or press conferences because we would be judged by our long - term results, not short - term ones. in addition, inflation was 2 % year on year in february and march, but 2. 9 % in april and 2. 6 % in may. personally, i would prefer inflation to be just below 2 %, not above. overall, almost two years after becoming governor, i can confirm that most of the inflation was actually imported or due to external costs. our dsge model did not

that without this moral hazard behaviour induced by the harmonisation of the dgs rules the impacts on the system would not have been so pronounced. or take another example. the regulatory debate on financial benchmarks in the world ( and within the eu ) influences sometimes adversely the willingness of banks to contribute to the benchmarks also in the markets where no improper behaviour of contributors has been proven or even detected so far. so it is great to harmonise and to coordinate. but you always have to bear in mind that you should not harmonise and coordinate towards rules that are riskier than the previous uncoordinated rules were on average. the third constraint is the one claudio borio of the bis calls the “ time inconsistency of financial stability policies ”. he says : “ policies that are too timid in leaning against financial booms but that are then too aggressive and persistent in leaning against financial busts may end up leaving the authorities with no further ammunition over successive financial and business cycles ” 1 yes, this is the case in many countries, including the czech republic now we have reached the zero lower bound. so, to put it more bluntly : the problem also might be that we central bankers are sometimes more procyclical and less symmetric in our thinking than we should be. and the fourth constraint is our own disbelief in the power of monetary policy. our experience – even in a small open economy – is that autonomous monetary policy can be very much of help, if not key, in stabilising the general macro - environment compared to the situation where monetary policy is just being passively accepted from abroad. and i say that despite the fact that inflation stabilisation in the current circumstances is a necessary but not sufficient condition for long - term financial stability. as the debate today shows, what this sufficient condition for long - term financial stability is, is not entirely clear and remains to be determined. but i would tend to believe that if there is any way forward in the area of financial stability, monetary policy will have to play an absolutely key role – a bigger role than many now think or admit. thank you. borio, c. : monetary policy and financial stability : what role in prevention and recovery?, bis working paper no. 440, january 2014 bis central bankers ’ speeches