of rising inflation. history has shown that many of the countries that have tried to exploit this alleged connection eventually experienced both : high inflation and high unemployment. thus, low inflation and not high inflation, is conducive to fostering sustained economic growth and job creation. concluding remarks i would like to sum up as follows : central bank independence is not an end in itself. as a matter of fact, such independence is, instead, a precondition for a stability - oriented monetary policy and helps to enhance its credibility. a monetary policy of this kind keeps inflation contained and inflation expectations solidly anchored. an environment of low inflation is, in turn, a prerequisite for sustained non - inflationary economic growth. therefore, a central bank ’ s best contribution to the economic development of a society is to pursue, above all, the goal of maintaining price stability. it is with good reason that central bank independence and the associated credibility of monetary policy are highly valued. thus, governments are, as a general rule, strongly advised not to interfere with a credible and independent central bank, but to value its contribution to overall stability and to the social as well as economic development of the country or region concerned. in this context, one should always remember that monetary policy credibility, – which is of utmost importance for the stable value of money – is hard won. it can, however, be easily lost, leading to longterm negative repercussions for the overall performance of an economy. references deutsche bundesbank, monetary policy transparency, monthly report, march 2000. deutsche bundesbank, the value of stable money, annual report 1996, pp. 78 – 88. european central bank, the accountability of the ecb, monthly bulletin, november 2002. issing, otmar, communication, transparency, accountability : monetary policy in the twenty - first century, federal reserve bank of st. louis review, march / april 2005, ( part 1 ), pp. 65 - 83. neumann, manfred j m, monetary stability : threat and proven response, deutsche bundesbank ( ed. ), fifty years of the deutsche mark – central bank and the currency in germany since 1948, oxford 1999, pp. 269 - 306. woodford, michael, central bank communication and policy effectiveness, presented at the federal reserve bank of kansas city symposium, “ the greenspan era : lessons for the future ", jackson hole, wyoming, 2005.

inflationary pressures, while others have pursued an aggressive easing of monetary policy to shore up growth and fight off prospects of deflation. many countries, including thailand, had to do both. this in turn, also becomes a concern for the central bank if frequent revisions or the abrupt reversal of the central bank ’ s monetary policy stance affects the public ’ s perception of the central bank ’ s credibility. as a result of the speed and magnitude of deterioration in economic conditions, central banks across the globe have pursued extremely aggressive monetary policy easing, with the intent of actively supporting their domestic economies against the global slowdown. this situation has led us to the second challenge to monetary policy – namely the challenge to its effectiveness. given current economic conditions, all the usual transmission channels have been clogged up. what happens when interest rates cannot be lowered any further? this is the challenge already faced in the us and the uk, and this challenge may need to be addressed by other countries in the near future. the us and the uk have begun to explore “ unconventional measures ” now that the traditional ammunition of lowering interest rates has been exhausted. this has included tackling the spread between commercial and government rates directly. the “ unconventional ” approach taken by japan in earlier decades – namely purchasing of medium - and longer - term government bonds, is also an option, although the japanese experience has shown that this has led to an increase in base money but did little to stimulate lending, as commercial banks have increased short - term liabilities and too many illiquid and undervalued long - term assets on their balance sheets. on the other hand, recent easing, as in the case of the us, has resulted in a more targeted, direct lending to businesses through purchases of commercial paper, and indirectly to households through purchases of mortgage - backed securities. 5. lessons from the current crisis : where do we go from here? so what are we to do going forward on this issue of monetary policy in a globalized world? i believe that there are a few issues that need our immediate attention amid the unprecedented crisis that we are in. first, recent monetary policy actions around the globe have included the aggressive, and in many cases unprecedented easing of policy interest rates, as well as measures to extend and improve banks ’ access to long - term liquidity, limit systemic risk, and increase banks ’ willingness to lend. but the use of these unconventional measures remains in unchartered territory, and few countries have had actual experience with