euro exchange rate, or in fact on any exchange rate, as a target of policy. neither is the case. i agree with john taylor, however, that any development in that direction would be deeply worrying. only a clear assignment of responsibilities ensures clarity about the central bank ’ s objective, which is at the heart of successful monetary policy. yet international complementarities exist in monetary policymaking, to the extent that an international architecture which has each central bank keeping its own house in order is also conducive to an environment of global monetary stability. such architecture provides the best basis for a friendly and open exchange of views and information at an international level. today there is frequent interaction as, for example, the bis provides a much - appreciated forum for discussion among central bankers. in addition, there are further occasions for fruitful exchanges – this very symposium being one of them. the role of the monetary policy strategy in an increasingly globalised world i have argued that the best international monetary architecture is one in which each central bank focuses on achieving domestic price stability. in practice, even more is needed to guarantee a successful monetary policy. a clear mandate for price stability and a welldefined monetary policy strategy based on this mandate are essential for coping successfully with the analytical and practical challenges which lie ahead. fortunately, both conditions are in place in the euro area. a clear mandate for price stability • ensures that a central bank is fully accountable for achieving price stability. the commitment to price stability which such a mandate generates is, in turn, conducive to anchoring private sector expectations in a lasting way. this anchoring is particularly important if globalisation causes sequences of one - sided shocks to inflation. • prevents central bank policy from going astray. while john taylor expresses concerns that central banks may be increasingly tempted to stabilise exchange rates at the expense of price stability, a clear mandate for price stability guarantees that a central bank will not fall into this trap. instead price stability - orientated central banks do not assign any special role to exchange rates, important as they are as information variables in the economic analysis. building on a clear mandate, a successful strategy • supports accountability. • ensures a transparent and systematic response to risks to price stability • guides an effective communication policy, • and enhances the predictability of monetary policy over the medium to longer term. in this context, any measure of price stability used by central banks must adequately reflect the evolution of the purchasing power of money. price stability

successful in general at supporting positive inflation and employment over the post - gfc period across a wide range of economies. these tools have, however, necessitated new modes of operation and communication. they have also worked through different transmission mechanisms, thus providing varying degrees of effectiveness and some unanticipated outcomes. the unanticipated outcomes – such as markets functioning differently, asset prices being impacted, and government balance sheets being inflated and exposed to other risks – are understood. but, these outcomes can become more significant the longer interest rates remain so unprecedentedly low. the reserve bank of new zealand has not, and still does not, need to use alternative monetary policy instruments to the ocr. but it is best to be prepared. this speech has outlined the key principles we would use to assess alternative tools available to bank, and the operational preparations we would need. we are confident of our success in assessment and implementation, but we are also aware that these tools work best when supported by wider stabilisation policies and additional macroprudential considerations. in the event we ever had to use these unconventional tools, our goal would be to ensure a strong and sustained increase in economic activity, with inflation expectations remaining well - anchored on our target mid - point.