. so, looking at my fellow central bankers here tonight, i must ask : what will we do? shall we sit quietly? i don ’ t think so. no, the job for the central bankers among us is clear. like on the painting, we will rise up, fiercely spread our wings, and protect our eggs from the menacing mongrel of inflation. hence the ecb ’ s recent move – to raise interest rates by 75 basis points. as my central bank colleagues gathered here tonight will confirm, this major transition in monetary policy was a necessity. at current inflation levels – levels that are threatening our european prosperity – we need to rapidly transition away from a highly accommodative monetary policy to interest rate levels that will support a timely return to our inflation target of two percent over the medium term. and i anticipate further rate hikes over the coming months, to be specified meeting by meeting, based on data, and guided by our objective of price stability. but we know that, even with our recent, major changes to monetary policy, it will take time for these changes to take effect in the economy and actually bring inflation down. that is why i am grateful to be here. however much i like preaching to the monetary choir in this room, being here gives me the opportunity to address the full efc, including member states ’ finance ministries, the european commission and related agencies. hence, an opportunity to re - emphasise the value of working together. in the aftermath of the global financial crisis, after 2008, monetary and fiscal policy were each fighting their own battles. partly due to this, and with the benefit of hindsight, economic recovery was slowed down. more recently, a mere two and a half years ago, the dog in the water was the corona virus. in the meantime, however, we had learned valuable lessons from the past. so when the pandemic hit us it was a swift and balanced cooperation between monetary and fiscal pandemic hit us, it was a swift and balanced cooperation between monetary and fiscal policy that gave our economy wings to fight back. and that is what we need to do now as well : to jointly work towards our common goal – a secure and prosperous europe. needless to say, each within our own mandate. but i would also like to express a word of caution though : fiscal measures that are aimed at compensating households for high inflation might themselves become inflationary when they further increase the imbalance between

axel a weber : the g20 agenda on financial regulation dinner speech by professor axel a weber, president of the deutsche bundesbank, at the international conference on financial market regulation, berlin, 19 may 2010. * 1. * * introduction ladies and gentlemen, these days it is hard to find a topic that is suitable for a light - hearted dinner speech. one could either choose to talk about a crisis - related topic, which would mostly be unpleasant, or one could choose to talk about something completely different and run the risk of appearing slightly out of touch with reality. as a compromise, i have decided to talk about one of the more positive outcomes of the crisis – assuming that “ positive ” is not a misnomer. as devastating as the crisis has been, it has set in motion a process of reform that will eventually lead to a more stable and resilient financial system in the future. originally, i wanted to give you a short overview of the state of these reforms. and even though i will stick to that plan, current events have to be acknowledged and i will do this at the end of my speech. 2. major issues of reform at the micro and macroprudential level the reform of financial regulation was initiated by the g20 during various meetings in london, washington and pittsburgh. having devised the general objectives, the g20 then commissioned the financial stability board and the basel committee on banking supervision to draw up proposals as to how these objectives could be met. the overarching principle of reform is to create a financial system that is more stable, more resilient and thus more capable of absorbing potential shocks. any attempt to achieve this objective has to begin with the individual institution – that is, at the microprudential level. preventing individual institutions from failing would serve as a first line of defence against systemic crises. regulation at the microprudential level centres on the basel ii framework, which was launched in 2004 and has been implemented by a large number of countries. in a nutshell, the basel ii rules require banks to provide risk - adjusted capital and liquidity buffers. these buffers serve to absorb potential losses and help to prevent failures. thus, an enhanced basel ii framework would further strengthen the first line of defence against future crises. relevant proposals were put forward in december 2009, including, among other things, measures to raise the quality, consistency and transparency of the capital base, a global standard for funding liquidity, and the introduction of a leverage