, in the coming years there is even greater need for responsible fiscal policies. and the benefits from fiscal responsibility are not limited to each country separately, but they are shared globally. in designing future economic policies, we need to remember at least three things. first, we need mechanisms to prevent over - borrowing, both in the private and public sector. second, risks need to be priced correctly. too low risk premia will lead to over - borrowing. last, resolving modern financial and economic crises demands international and regional cooperation. achieving all this will require new approaches and new attitudes both in the public and private sector, and this will – of course – be hard. however, failure to achieve these goals would increase the risks of more crises in the future, and this is unacceptable. * * * we are celebrating now the anniversary of one of the world ’ s great central banks, a bank with long traditions and a turbulent past. i think that this jubilee is especially significant for us finns. this is so because the russian and finnish monetary systems share a lot of common history, in particular from the 19th century, when the grand duchy of finland was established as a part of the russian empire. 1860, the birth - year of the central bank of russia, was an important turning point also in the monetary history of finland. in march 23, 1860 ( old style ), emperor alexander ii issued a decree which gave finland a monetary unit of its own, the finnish markka. before that, the bank of finland had issued banknotes denominated in rubles and kopecks. in june, at about the same time when the central bank of the russian empire was established, the first markka banknotes were circulated. both the bank of russia and the national monetary system of finland were born as a result of a crisis which hit the rouble in the latter half of the 1850 ’ s. in 1860, the imperial government of finland sought ways to stabilize the currency with the aim of linking it with silver, even ahead of russia, if necessary. this was the background to the creation of a national monetary unit for finland. at the same time, the russian government carried out a more comprehensive institutional reform by founding a new central bank to replace the old state banks. this was also made as a step towards a stable and market - based financial system. circumstances are completely different now, of course, but one thing remains at least : financial and monetary stability are still the main objectives of today ’

? that is, should they “ lean against the wind ” ex ante, even if no action would otherwise be required from a purely inflation targeting point of view? or should central banks still confine themselves to cleaning up any possible damage ex post? another question pertains to the phillips curve. supported by ample monetary policy accommodation, output and employment have recovered from the deep economic slump. but even in the face of tightening labour markets, inflationary pressures have long been subdued. does this mean that the structural relationships between output and inflation that we took for granted are no longer valid? the sintra conference, which ended yesterday, delved into this topic in greater detail. today ’ s conference, especially sessions i and iii, will be concerned with other topics that have come to the fore in the aftermath of the crisis : changes in the real economy, for example in market structures, that may also have a bearing on allocative efficiency and monetary policy, and a reassessment of the optimal rate of inflation. in the remainder of my speech, i will comment on some of these topics as well as on last week ’ s governing council decision. 2 mark - ups and macroeconomic adjustment in particular, session i focuses on a longer - term trend that may have eluded economists and policymakers alike in previous years – that is, the rise in mark - ups of firms in the us over the last decades. david dorn has already pointed out that the increasing share of superstar firms in the us might be at least partly responsible for this trend. 4 as globalisation and technical progress favour the most productive firms in each industry, product market concentration, market power and thus mark - ups tend to increase. 2 / 7 bis central bankers'speeches in a recent article, the weekly magazine the economist suggested that american tech giants had created a “ kill - zone ” surrounding them. i quote : “ once a young firm enters, it can be extremely difficult to survive. tech giants try to squash startups by copying them, or they pay to scoop them early to eliminate a threat. ” 5 such aggressive behaviour may lead to monopoly distortions, which affect the allocation of resources within an economy. the importance of improving allocative efficiency has already been discussed earlier today by david baqaee. 6 in his paper with emmanuel farhi, he calculates that eliminating mark - ups due to monopoly distortions could raise total factor productivity by as much as 20 %. this points to the important role