the so - called time inconsistency problem. in this sense, as frederic mishkin1 argues, central bank independence and inflation targeting are mutually reinforcing. adopting inflation targeting is not just a matter of choice, but also of fulfilling a number of key requirements. having these in mind, i believe that romania is in a good position to pursue disinflation by implementing such a framework. most of the conditions required for a successful implementation of the inflation targeting framework in romania have already been met : - by year end 2004, inflation was brought down to single digit levels for the first time from 1990 onwards ; - since 2004, the national bank of romania has benefited from full operational independence, as stipulated by law no. 312 of june 28, 2004 ; - the success in disinflation over the recent years has strengthened the nbr ’ s credibility ; frederic s. mishkin, “ what should central banks do? ” federal reserve bank of st. louis review, vol. 82, # 6 ( november / december 2000 ) : 1 - 13. - after five years of continuous development and adequate supervision, the financial sector can undoubtedly be considered sound and stable ; - fiscal dominance is no longer an issue, witness the afore - mentioned legal independence of the national bank, a relatively low public debt, as well as the increasingly consistent financial policies mix ; - inflation targets have been set for the following years in cooperation with the government. the pre - accession economic programmes underline the commitment to attain these targets ; - since 2002, an inflation report has been published on a half - yearly basis. following the implementation of inflation targeting, the report will be published quarterly ; - a model calibrated by the bank ’ s staff is currently being tested and will be used for forecasting purposes. instead of going into the details related to the inflation targeting framework, i will let my fellow speakers tackle the most important issues. shortly after this, deputy governor ms. rachel lomax will present a compelling account of uk ’ s experience and, may i add, success as a benchmark inflation targeter. after the lunch break, gill hammond, deputy director of ccbs, will give you an excellent presentation dealing with specific issues and challenges faced by emerging market economies when adopting inflation targeting. later on, we will have our guests from the czech national bank and the national bank of hungary giving you a purposeful insight of such challenges and of their countries ’ experiences with the it framework. mr

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