why it is vital that our sons and daughters are taught not that financial crises are inevitable, but that they are both avoidable and tremendously costly for jobs, growth and prosperity. the lessons of the crisis need to be learned and handed down to future generations in order that the next phase of reform is sustained. those reforms have the potential to make finance more effective in serving the real economy. a more diverse financial system can be both more resilient and more effective. if it is structured correctly, each form of intermediation will not be subject to the same risks. diversity also allows risks to be more closely aligned with risk - bearing capacity in the system. with scope for creditor preferences to be more closely matched with those of borrowers, the full potential of finance to intermediate can be exploited and the cost of finance for the real economy minimised. if we can succeed in safely and sustainably combining bank and market - based finance, the effectiveness of the system can be dramatically increased. households and businesses can benefit from access to markets while the advantage of banks in originating loans can continue to be exploited. a trusted financial system can be much more effective. through cultural change, reforms to compensation and building markets that are transparently fair, finance can earn the legitimacy needed to operate and innovate to serve customers and clients in the real economy. the literature on the benefits of an open global financial system is admittedly mixed. the contradiction between this conclusion and the clear and overwhelming benefits of trade integration is reconciled by the previous unsafe and potentially unstable nature of the global bis central bankers ’ speeches system. as my colleague andy haldane observed recently, connectivity can serve as a shock - transmitter. 30 a risky system cannot be an open system. the renewal of globalised finance must therefore go hand in hand with making the global system safer, including through mutual trust and cooperation between supervisors and regulators. how can we expect emerging economies to participate fully in an open global system without the confidence that they won ’ t again be side - swiped by the failure of a large foreign bank? that confidence is growing as we make the system safer. consistent, full and timely implementation of global standards is necessary to continue to build the cross - border trust on which an integrated system can be founded. once the safety of the system is secured, the costs of openness will be contained. the road will be clear to secure the substantial benefits of openness in supporting trade and investment. conclusion the brisbane summit marked the point

year increase in the harmonised index of consumer prices ( hicp ) for the euro area of below, but close to 2 % over the medium term. by referring to an increase in the hicp of below but close to 2 %, the ecb has made it clear that hicp inflation of 2 % or above, but also very low or negative rates of inflation are not consistent with its price stability objective. therefore, we aim at a low positive inflation rate in order to mitigate the detrimental effects of inflation on the euro area economies while at the same time maintaining a sufficient safety margin against potential risks of deflation. another fundamental aspect of our definition of price stability is its medium - term horizon, which means that we do not attempt to fine - tune the inflation rate at short horizons, but aim at keeping inflation below but close to 2 % over the medium term. the medium - term orientation of our strategy acknowledges that – in view of long, variable and uncertain transmission lags – monetary policy is not equipped to control price developments at short horizons. monetary policy can only act in a forward looking manner and maintain price stability over longer periods of time when monetary policy measures come into effect. a two - pillar framework for the monetary analysis in the context of our two - pillar framework consisting of the economic analysis and the monetary analysis we assess the risks to price stability in the euro area in a comprehensive manner based on two complementary analytical approaches : • the economic analysis focuses on the short to medium - term risks to price stability, based mainly on the assessment of current economic and financial developments from the perspective of the interplay between supply and demand in the goods, services, and factor markets. • the monetary analysis focuses on a broad range of monetary indicators and measures of excess liquidity as well as credit developments. it serves as a means of cross - checking, from a medium - to a long - term perspective, the indications coming from the economic analysis. this two - pillar framework ensures that the monetary policy decisions of the governing council are based on an overall assessment of the risks to price stability and are robust across different analytical perspectives. this strategy is the basis for the soundness and transparency of our policy conduct. it provides a clear orientation to the public with regard to the medium - term goal of monetary policy and a clear yardstick against which our policy can be held accountable. and it ensures that we take all information relevant to price stability in the euro area duly into account and pursue our mandate in a steady and