for greater co - operation is the lessons that emerge from the build - up of structural imbalances in the euro area before the crisis. a corollary of monetary integration is the elimination of exchange rate risk, which reduces transaction costs and increases the elasticity of substitution between financial assets issued by member states of the monetary union. in the euro area, financial linkages were greatly facilitated by the introduction of the single currency. a distinct feature of these linkages was the build - up of current account imbalances. deficits accumulated in the periphery were mirrored by a build - up of surpluses in core countries. the financial account counterpart involved significant capital flows from the core to the periphery, with its counterpart in the accumulation of debt – whether public or private. these flows were directed 2 / 3 bis central bankers'speeches mainly to non - tradable sectors ( public consumption and residential investment ). the crisis brought with it a “ sudden stop ” to these capital flows, resulting in sharp adjustment, largely in deficit countries8. subsequently, much has been done to address what we now recognise as deficiencies in the design of the economic and monetary union – the european financial stability facility and subsequently the european stability mechanism ; the banking union and its components. but more importantly for imbalances, the surveillance framework of eu member states has been strengthened through new rules and procedures, among them, the macroeconomic imbalances procedure. in short, co - operation is important also at the regional level. these changes are also supporting the reform process in greece. conclusions the course and magnitude of global financial flows and our own perceptions of financial openness are being continually reshaped in the 21st century. a period of relative abundance was rapidly brought to a halt with the international financial crisis of 2008. our experience with free capital flows can help us ensure that in the future we harness their benefits and multilateral cooperation is key to achieving that. 1 ( 1 ) see obstfeld, maurice. risk - taking, global diversification, and growth. no. w4093. national bureau of economic research, 1992, van wincoop, eric. “ how big are potential welfare gains from international risksharing?. ” journal of international economics 47, no. 1 ( 1999 ) : 109 – 135 and agenor, pierre richard. “ benefits and costs of international financial integration : theory and facts. ” the world economy 26, no. 8 ( 2003 ) : 1089 – 1118.

unlimited congressional policy audits ; adopt a specific equation in setting monetary policy and require from the fomc to justify, through congressional hearings and investigations, deviations from the policy dictated by that equation ; and use the fed as a source of finance to monetize specific government initiatives ( see fischer, 2015 ). in the euro - area, on the other hand, the qe programme has been challenged both for being too expansive, as well as for being too limited. similar criticism has been voiced regarding the effects of monetary policy in the uk. my own verdict is that the challenge should not be in the very concept of independence, but rather in the current economic policy mix : loose monetary policy plus tight fiscal policy. by keeping interest rates in negative territory for too long, the redistribution effects of monetary policy and the perceived degree of success of meeting the mandated objectives become more pronounced. starting with the former, low interest rates redistribute wealth from savers to borrowers ; and result in higher asset prices. reduced real returns on savings have caused reactions from circles representing the savers ’ constituency, both within and across countries, a point particularly relevant within the emu ; and as the distribution of asset holdings is highly uneven among sections of the population, the benefits of qe programmes may also be seen to be uneven. on the other hand, cbi independence may be questioned as long as recovery in major economies remains fragile ; or is perceived as not achieving equally good performance across the board of its extended set responsibilities including, for example, financial stability. the independence of central banks may be scrutinised due to concerns as to whether a central bank with an extended mandate of objectives can operate transparently and with an appropriate degree of accountability in the context of a democratic political and economic system. all in all, an independent central bank that is subject to democratic accountability needs broader support from the public. clearly, with persistent negative rates you are bound sooner or later to lose major parts of the broad constituency that you need as an independent central banker. central banks have resisted challenges to their independence, pointing to the fact that political pressure onto monetary policy, mainly stemming from the fact that political cycles are shorter than the cycles faced by monetary policy design and implementation, introduces into macro - performance exactly the kind of pressure cbi was initially meant to address. for example, in the us, despite low inflation, survey - based measures of longer - term inflation expectations remain in the area of 2 % ( see fischer