john hurley : comments on the financial crisis address by mr john hurley, governor of the central bank & financial services authority of ireland, at a lunch meeting of eu ambassadors to ireland, dublin, 27 april 2009. * * * among governor hurley ’ s comments at the event were : the global economy is currently experiencing the deepest and most synchronised downturn for many decades. in its latest economic outlook, the international monetary fund has forecast a contraction in global activity of around 1½ per cent this year. we have seen a small improvement in some economic indicators internationally in recent weeks, but i have to say that, at this stage, these remain more consistent with further contractions in output – albeit at a slower pace – rather than actual growth. while the fund has forecast very modest positive growth at the global level for next year, the recovery may be rather gradual. on the other hand, global inflationary pressures have moderated significantly since the middle of last year. the euro area headline rate was 4 per cent as recently as last july but has now fallen to below 1 per cent. this easing initially reflected a sharp decline in commodity prices – oil prices fell by over $ 100 per barrel in the second half of last year – but the impact of the downturn on prices is increasingly playing a role. reflecting these developments, headline inflation could turn negative in a number of advanced economies this year. this is a development that is likely to last for a number of months in the case of the euro area, before there is a return to moderate rates of positive inflation. policymakers have taken unprecedented steps to limit the impact of the current downturn. these have included financial sector intervention, as well as monetary and fiscal policies. a very wide range of measures has been taken to support financial institutions. these include recapitalisations, deposit guarantee extensions, debt guarantees, extensive provision of credit and liquidity, and acquisition or ring fencing of bad assets. as the global outlook has continued to deteriorate, many countries have also introduced significant wider fiscal measures to support the economy. as far as monetary policy is concerned, central banks have cut policy rates significantly – in many cases to unprecedented levels – and have taken a range of unconventional measures. this has led to a sizeable expansion of central banks ’ balance sheets, including the ecb ’ s. in particular, it is worth noting that euro area banks have been permitted to borrow an unlimited amount at the relevant policy rate against eligible collateral for some time now

unusual institution in that in addition to being the national central bank and competent authority for banking, we are also the competent authority for funds, for insurance, the national macroprudential authority, the national resolution authority and we play a key role in ireland's consumer protection framework. the diverse and integrated nature of our mandate means we see issues from multiple perspectives, focusing not just on financial stability, but also prudential, consumer and investor protection issues. being diverse and integrated helps our thinking and helps us give a rounded response to the issues we face. our role also enables us to be embedded across multiple eu fora, covering not just the eurosystem, esrb and ssm, but also esma, eiopa, the eba and srm, and internationally at iosco, in what can feel like a veritable alphabet soup of meetings. the point i want to emphasise is diversity within organisations, and diversity across europe, helps all of us be more future - focused and better anticipate issues. it helps us in our important safeguarding role. and it helps us manage change and deliver our own transformations. advances in technology will continue to pose questions to established ways of working and provide us with both challenges and solutions. so we must bring diverse thinking, ideas and perspectives to find better solutions than we would on our own. being future - focused as leaders will enable us to better understand, anticipate and adapt to innovation and the wider transformation taking place in our own organisations and across the financial services industry. being connected strengthens our leadership 3 / 7 bis - central bankers'speeches let me turn to connections. not so long ago, successful monetary policy was believed to be mainly a matter of managing overnight interest rates effectively ; communication and engagement was of little concern for central banks or regulators. in fact alan greenspan was happy to say that since he had become a central banker, he had " learned to mumble with great incoherence - if i seem unduly clear to you, you must have misunderstood what i said ". i will try to prove that this is no longer the case! central banks and regulators around the world are making concerted efforts to help people understand what they do and why they do it. being connected strengthens our leadership. connected with each other. connected to industry and the firms we regulate. connected to the real economy. and connected to the public that we serve. to enable forward - looking regulation and to be a