countercyclical macroeconomic and prudential policies may be relied upon to tackle a slowdown in capital inflows. where there is less room for manoeuvre, tightening monetary and fiscal policies may be required to lower financing needs and attract additional inflows. where foreign reserves are adequate, they may be used to moderate or smoothen exchange rate depreciation. let me now move on to the second point of my intervention : how inflation targeting has evolved in response to the post - crisis global economic and financial environment. the nbr, the same as the central banks of poland, czech republic and hungary, is an inflation targeter. in romania, we have remained loyal to inflation targeting since 2005, but inflation targeting itself is quite different now from 15 years ago. indeed, it is rather difficult to say at present what is left of its underlying principles. the outbreak of the global crisis and the post - crisis developments have naturally led to the tailoring of the strategy to the new realities. some departures from the old orthodoxy are almost unavoidable in 1 / 3 bis central bankers'speeches the present context, marked by a changing global financial and economic landscape. for instance, after the crisis, forex interventions re - entered the arsenal of many central banks, including some of the previously more purist floaters. a case in point is the czech national bank, which resorted to the so - called “ exchange rate commitment ” from november 2013 to april 2017, intervening whenever necessary without time or volume limits to prevent the appreciation of the koruna below a publicly announced floor. i find relevant what agustin carstens, general manager of the bis, said in his lecture held at the london school of economics in may 2019 : “ the textbook version of the inflation targeting framework, which prescribes pursuing inflation stability with floating exchange rates through adjustments of a short - term interest rate, is obviously too narrow for eme central banks. in particular, the financial channel of the exchange rate gives rise to difficult trade - offs for monetary policy, while at the same time complicating the conduct of monetary policy by weakening its transmission. eme central banks have risen to this challenge through their innovative use of additional policy instruments. they have turned to fx intervention to deal directly with the financial channel or insure against undesired exchange rate swings, and to other non - orthodox balance sheet policies as well as macroprudential tools to deal with specific imbalances or vu

is singular in the region in terms of size and trend. it owes to the faster growth of domestic absorption than that of domestic output, as well as to non - price competitiveness issues manifest in certain production sectors. therefore, striking the right balance in terms of the interest rate differential is of the essence. after the tightening undertaken so far in romania ( including three policy rate hikes in the first half of 2018 ), it is probably wise to proceed cautiously in the future. 2 / 3 bis central bankers'speeches which brings me to the last issue i would like to address : what is advisable in terms of economic policies in order to cope with any future adverse developments. for the sake of simplicity, allow me to try to formulate three general rules that are instrumental in dealing with such developments. first of all, irrespective of the possible scenarios, it is wise to put your house in order before the storm comes. one example is fiscal consolidation, which is paramount for the economy. relatively high fiscal and current account deficits may weaken the foundation of the building and adjusting them in a smooth manner is a much more sensible thing to do than letting the market forces make an abrupt correction. as regards monetary policy, strict liquidity management represents a step in the right direction. but, of course, monetary policy alone is not enough. which brings us to the second rule : there is no substitute for a predictable and coherent economic policy mix. let me stress that it should remain so even when facing the challenges of election years ( there are several election rounds in romania in 2019 and 2020 ). a significant pace of economic convergence is desired, but the process should unfold sustainably to preserve macroeconomic equilibria and safeguard competitiveness. as i usually put it, to successfully adopt the euro, one should be a marathoner rather than a sprinter. last, but not least, the third rule might be as follows : when the normalisation wave eventually hits, the magnitude of the impact will depend on how vulnerable emerging economies are to external financing. a contained current account deficit, a long average maturity on public and private foreign currency debt and a coherent mix of countercyclical macroeconomic policies and structural reforms would go a long way in limiting the risks. if proper economic policy actions are not implemented while there is a window of opportunity, the possibility of a forced resort, in a more or less distant future, to sub - optimal measures in the face of adversity cannot be