) and are now being transposed into national legislation in the g20 and other countries, strike this balance, in my opinion. creating level playing fields is another important demand when it comes to seriously improving regulation. therefore it is of the utmost importance to further promote the convergence of international and us accounting standards, unless we want to continue to compare apples and oranges. however, in this context i appreciate that the iasb ( international accounting standards board ) has recently agreed to refrain from broadening the fair value principle in the ifrs. strengthening banks ’ capital base is certainly the most important, but also the most difficult, task on the regulatory reform agenda. being involved in the processes of the basel committee and the fsb, the bundesbank appreciates the decision by the g20 to improve the quality and quantity of banks ’ capital once the financial system has stabilised on a sustainable basis and the economy has recovered. however, we should refrain from unsettling the markets with precise schedules. getting it right is important. the impact study of the new capital measures of the basel committee on banking supervision, which is planned for 2010, should provide some enlightening information. as regards the introduction of a leverage ratio, we are afraid of competitive distortions, in particular owing to differences in accounting standards. we therefore welcome the plan to apply this risk - insensitive measure ( at least temporarily ) under pillar 2 of basel ii. basically, we are against deviating from the principle of risk - sensitivity in the basel framework. in this regard, the commitment of all g20 financial centres to adopt basel ii by 2011 has been a very positive outcome of the pittsburgh summit. the implementation of a high level, and better quality, of capital requirements in the long run, counter - cyclical capital buffers and higher capital requirements for risky products and offbalance sheet activities are not only in the interest of the public, they should also be in the interest of the banks themselves. on top of that, banks should make greater use of the options they already have to strengthen their capital base, be it by withholding profits or raising private or sovereign capital. conclusions let me conclude. financial stability is not just a buzzword as some critics suggested a few years ago. the financial crisis has proven them wrong. policymakers have shown their commitment to take decisive steps in order to make the financial system more stable. now it is up to the central banks and the other players in macro - prudential supervision to

axel a weber : globalisation, monetary policy and the euro speech by professor axel a weber, president of the deutsche bundesbank, at the norges bank ( central bank of norway ) conference on monetary policy “ jarle bergo colloquium : globalisation and monetary policy ”, oslo, 7 march 2008. * * * introduction speaking on globalisation and monetary policy at the current juncture i feel tempted to refer to the famous song by bob dylan “ the times they are a - changin ”. one verse has several great lines of advice for economists : come writers and critics who prophesize with your pen … … … … … … … and don't speak too soon for the wheel's still in spin … … … … … … … …. the loser now will be later to win for the times they are a - changin '. it was only some months ago when a lot of “ writers and critics have prophesized ” that in an era of globalisation inflation is and should be no reason for concern for monetary policy makers. with the benefit of hindsight they should have followed bob dylan ’ s advice : “ but don ’ t speak too soon, for the wheel is still in spin ”. today inflation has reappeared on a global scale and – in the face of the global financial turbulences of the past months – the debate in the media has switched from being in a “ goldilocks environment ” to the inherent risks of entering a period of stagflation. considering that, as bob dylan put it, “ the times they are a - changin ” a medium - to longerterm perspective is of the essence. taking such a medium - term view, i have always belonged to the sceptics with regard to the “ globalisation = low inflation ” - paradigm. in my following remarks i want to concentrate on some of the implications globalisation has for monetary policy. there are at least two issues at play here : the influence of global factors on domestic price developments as well as the implications of globalisation for the transmission of monetary policy. moreover, i want to briefly discuss the current stance of monetary policy in the euro area in the face of global inflationary pressures and global financial tensions. i will argue that with regard to the first two more general aspects the globalisation process does not fundamentally call into question the ability of an independent central bank to guarantee price stability over the medium - term. thus, globalisation by no means reduces