jean - claude trichet : educational games “ €conomia ” and “ inflation island ” remarks by mr jean - claude trichet, president of the european central bank, at the launch event for the educational games “ €conomia ” and “ inflation island ”, frankfurt am main, 8 december 2010. * * * ladies and gentlemen, i ’ d like to welcome you all to this launch event here today – in particular the students and teachers who accepted our invitation. i also extend a warm welcome to all the other visitors, notably the ecco colleagues and media representatives – and to ecb staff members who have worked on this project. in recent years, central banks have become important communicators and since its founding in 1998 the ecb has engaged on several avenues to broaden its outreach. the ecb was the first major central bank in the world to hold a press conference immediately after the governing council meeting to explain its monetary policy decisions. we publish a monthly bulletin for specialised audiences. we have educational videos on our website for the general public, we have games for children and of course we have our general publications. in 2010, our website was visited approximately 25 million times. every year, around 13, 000 people visit the ecb and we talk to them about the economy and our work. but there is always room for further improvement. and this is no time for complacency. we want to reach out to you – young people who have grown up in a networked, multimedia world. so we decided to develop games like these because their interactivity and playfulness could help enhance the learning experience. today we are launching “ €conomia ” and “ inflation island ” on our website, and we will continue our work on such tools in the next few years. we expect the games to make this institution and its activities more accessible. the games are available in 22 european languages. you have just been playing against each other in “ €conomia ” and i hope you found it interesting and fun. but perhaps it wasn ’ t so easy to keep inflation low and stable, in line with our definition of price stability : less than 2 %, but close to 2 %. if that was the case, then the games have already served a purpose, because in real life it is challenging to keep inflation low and stable. developing, producing and translating both games was quite a challenge as well. i ’ d like to thank everyone who has worked on the

. involuntary part - time and temporary work – which has to be absorbed again before wage pressures increase. in practice, we are seeing positive signs : in fact, the difference between the overall unemployment rate and broader measures of slack on the labour market has declined somewhat over the past two years. the proportion of enterprises in manufacturing and services which say that labour shortages are limiting their output has never been so high. the result is stronger wage growth, which is contributing to an increase in inflation. several measures of underlying inflation have apparently passed the turning point. i say the word “ apparently ” as monetary policymakers should be cautious in their judgements1. the estimates of slack in the economy differ widely and are often corrected. model results, as complex as they may be, should be treated with the requisite caution. in the end, assessments based on experience continue to be an essential part of monetary policy decision - making. monetary policy decisions should therefore not only be based on model results, but should also take into account the balance of risks. there are times when lack of action is much more dangerous than taking action and when resolute action is the most reasonable thing to do. for example, our purchase programme was necessary to avert the risk of deflation. however, there are also times when the balance of risks changes fundamentally and thus monetary policymakers should act more carefully. future challenges facing monetary policy so now let ’ s turn our attention to the future. i believe that the conditions for gradually ending the asset purchase programme are in place. however, it is up to the ecb ’ s governing council to decide on the exact timing of such a move. i ’ m not going to talk about the possible timing today. let me instead touch on some of the risks we will face in implementing our monetary policy over the coming years. these risks are likely to grow the longer our asset purchase programme continues. the first risk relates to the subsiding deflationary headwinds i have already mentioned. could it be that our monetary policy is suddenly too expansive? in short, because of the uncertainties and imprecisions involved in measuring slack and inflationary pressure, we might find ourselves behind the curve without realising it. as a result of the long and variable lags of monetary policy, we could end up with inflation above the rate consistent with our mandate. this would require a sharp correction of our monetary policy stance in years to come. yet such a correction of interest rates would pose risks to