bank of australia : fiftieth anniversary symposium, christopher kent and michael robson ( editors ), reserve bank of australia ( 2010 ), pp. 38 – 41. bis central bankers ’ speeches are needed, as many countries faced with large short - term capital inflows – including israel – have concluded in recent months. exchange rate management can be difficult in a growing small open economy with a strong financial system. capital flows are likely to be very sensitive to interest rate differentials, which leads to the exchange rate bearing more of the burden of adjustment to inflation and aggregate demand than may be optimal from the viewpoint of policymakers. in such a case, the country may be tempted to join a currency bloc. membership of a currency bloc demands disciplined management of the domestic economy – of fiscal policy, and of the financial system. the exchange rate cannot be changed without leaving the bloc, a step with unknown but certainly major, probably massive, consequences for the economy. at this time, many expound on the constraints that membership of the euro area impose on countries that cannot devalue. these constraints clearly matter. but it is rarely noted that when countries did have the freedom to devalue, changes in exchange rates were frequently disruptive of trade with their neighbors – and further that some countries that did have that freedom mismanaged it, and paid a significant price in terms of economic performance. or to put it differently, whatever type of exchange rate arrangement a country has, there will be times when it wished it had a different one. i have emphasized the exchange rate problems likely to face small open economies, for that is the type of economy in which i operate. but the truth is that most of what i have said about exchange rate management in a small open economy is true of any open economy, large or small. lesson 7 : the eternal verities – lessons from the imf while i have emphasized lessons that we central bankers have learned from the crisis, many of them lessons that our predecessors knew long ago, the crisis has also reinforced lessons we learned long ago. in particular, this crisis has reinforced the obvious belief that a country that manages itself well in normal times is likely to be better equipped to deal with the consequences of a crisis, and likely to emerge from it at lower cost. in particular, we should continue to believe in the good housekeeping rules that the imf has tirelessly promoted. in normal times countries should maintain fiscal discipline and monetary and financial stability. at all

##tiara hotel in kuala lumpar, malaysia. this recipe book is a product of lessons from simi ’ s malaysian experience, as well as his many years of work experience in the tourism industry both in fiji, and abroad. the book has been written for every chef, whether you work in a large commercial kitchen, small restaurant or home kitchen. it has been designed to promote the innovative use of locally grown foods and produce. the book titled “ kana mada – fiji style ” was produced through the collaboration of the fiji national university and the reserve bank. we hope that you will buy a copy today and continue to support our farmers, market vendors and manufacturers in fiji by buying their produce. finally, i do urge you all to visit the booths and stalls set up by the various financial institutions, and indeed by the reserve bank and other stakeholders. this is your golden opportunity to learn more about the facilities and various products that are available. i am sure our staff and colleagues will be more than willing to assist you and perhaps do some business! bis central bankers ’ speeches ladies and gentlemen with these words, i have much pleasure in officially opening our inaugural “ financing day ” at this year ’ s crest agriculture show, and in launching the “ kana mada fiji style ” recipe book. vinaka. bis central bankers ’ speeches