was already an intensifying buildup of inflation and inflation expectations. in another echo of today, the inflationary situation was further worsened by rapidly rising prices of agricultural products and other commodities. economists generally agree that monetary policy performed poorly during this period. in part, this was because policymakers, in choosing what they believed to be the appropriate setting for monetary policy, overestimated the productive capacity of the economy. i'll have more to say about this shortly. federal reserve policymakers also underestimated both their own contributions to the inflationary problems of the time and their ability to curb that inflation. for example, on occasion they blamed inflation on so - called cost - push factors such as union wage pressures and price increases by large, market - dominating firms ; however, the abilities of unions and firms to push through inflationary wage and price increases were symptoms of the problem, not the underlying cause. several years passed before the federal reserve gained a new leadership that better understood the central bank's role in the inflation process and that sustained anti - inflationary monetary policies would actually work. beginning in 1979, such policies were implemented successfully – although not without significant cost in terms of lost output and employment – under fed chairman paul volcker. for the federal reserve, two crucial lessons from this experience were, first, that high inflation can seriously destabilize the economy and, second, that the central bank must take responsibility for achieving price stability over the medium term. fast - forward now to 2003. in that year, crude oil cost a little more than $ 30 per barrel. 3 since then, crude oil prices have increased more than fourfold, proportionally about as much as in the 1970s. now, as in 1975, adjusting to such high prices for crude oil has been painful. gas prices around $ 4 a gallon are a huge burden for many households, as well as for truckers, manufacturers, farmers, and others. but, in many other ways, the economic consequences have been quite different from those of the 1970s. one obvious difference is what you don't see : drivers lining up on odd or even days to buy gasoline because of price controls or signs at gas stations that say " no gas. " and until the recent slowdown – which is more the result of conditions in the residential housing market and in financial markets than of higher oil prices – economic growth was solid and unemployment remained low, unlike what we saw following oil price increases in the'70s. for a

meeting of shareholders : “ corruption, criminal activity and tax evasion not only undermine the community but also distort the behaviour of economic agents and market prices, reduce the effectiveness of government action, increase the tax burden on those who do their duty, and restrict productive investment and job creation. well - functioning public administration improves the operation of markets and competition, reduces firms ’ costs, and is reflected in the quality and cost of public services and thus on the tax burden. the efficacy of the reforms depends on it. ” 22. these policy actions should not be eluded. for them to be effective, they must be seen as a part of a fully - fledged strategic reasoning on the prospective functioning of our economies. more generally, while we try to better understand the challenges posed by structural and technological change, there are questions that it is fundamental to address. among them : how should the education system adapt to enable the teaching of those skills essential to keep up with new technologies? how can we enable displaced workers to acquire skills which will not become, or are less likely to become, redundant through computerisation? how can public policy smooth the social impact of technological progress and allow a wider distribution of its fruits? bis central bankers ’ speeches