therefore means that the country ’ s income is increasing. a falling terms of trade, on the other hand, means less income for the country overall. as a major exporter of resources, canada saw its terms of trade move sharply higher from 2001 through 2008, and this was largely maintained until mid - 2014. since then, however, falling world prices for oil and other commodities have reversed much of that rise. measured at annual rates, this represents a loss of more than $ 50 billion in national income, or about $ 1, 500 for every canadian. this shock is leading to significant and complex economic adjustments in canada – in effect, a reversal of the forces that drove our economy during the years when resource prices were rising. to help understand these forces, let ’ s recall what happened to the economy during the period of rising oil prices. back in 2002, when oil prices were around us $ 25 per barrel, investment in the oil and gas sector represented about 17 per cent of total business investment here in canada. by 2014, that figure had jumped to 30 per cent. the share of oil and gas in canada ’ s merchandise exports almost tripled over that same period. this rise in the importance of our energy sector was a natural response to higher prices for oil – because the world was offering more for each barrel, we invested more in our capacity, and more canadians moved to work in the oil patch. this is also why the impact of the sudden drop in oil prices has been so large. net importers of natural resources, such as the united states and europe, are seeing the opposite phenomenon. their overall income is now higher because import prices are lower relative to their export prices. but other commodity - intensive economies, such as australia, mexico, chile and brazil, are working through conditions similar to those here in canada. of course, most countries have a diverse domestic economic structure. certainly, that is the case here in canada. so, just as we see divergence in economic performance between countries in response to lower resource prices, so, too, we see divergence within canada, among our different sectors and geographic regions. for example, the unemployment rate in the energy - intensive provinces – alberta, saskatchewan, and newfoundland and labrador – has risen more than two percentage points since november 2014, while it has remained unchanged in the rest of the country. this bis central bankers ’ speeches divergence is also evident in consumer spending. for example, motor vehicle sales have fallen by about 10 per cent

speech embargo 20 september 2018, 5. 30 pm third karl brunner distinguished lecture introduction of otmar issing, eth zurich thomas j. jordan chairman of the governing board swiss national bank zurich, 20 september 2018 © swiss national bank, zurich, 2018 page 1 / 4 ladies and gentlemen, i am very pleased to welcome you all to the third karl brunner distinguished lecture. in this lecture series, the swiss national bank pays tribute to academics whose research is of particular relevance for central banking. this year, we are expressing our appreciation of an outstanding monetary policy theorist and practitioner, an independent mind and a leading voice in economic affairs. from this description, you may doubt that i am talking about just one person. but i am. that person is, of course, otmar issing. professor issing ’ s life has been extraordinary and widely admired. his scholarly activities and policymaking contributions have been both impressive and mutually reinforcing. his publication list includes numerous articles in scientific journals and periodicals. his collected speeches and articles in the library of the bundesbank amount to 21 volumes of about 10, 000 pages. his textbooks have shaped the understanding of monetary theory and policy of entire generations of students, myself included. while there are many reasons for the snb to honour otmar issing with this karl brunner lecture, three stand out : his role as chief architect of the european central bank ’ s ( ecb ) monetary policy strategy, his tireless commitment to price stability, and his significant influence on general economic debate. i shall discuss each of these during the rest of my welcome address. however, first allow me to recount a few stages in a career full of accomplishments. otmar issing was born on 27 march 1936 in the university town of wurzburg. at the age of 18, he enrolled for classical philology, the study of classical languages, but soon switched to economics. he earned his phd in 1961 and received his habilitation in 1965. from 1967 to 1990 he was a professor of economics. in 1990 he joined the board of the deutsche bundesbank. and in 1998 he became a founding member of the executive board of the ecb and its first chief economist. since 2006 he has been president of the center for financial studies at the goethe university in frankfurt am main. architect of ecb strategy ladies and gentlemen, let me now focus on the three attributes central to our decision to honour otmar issing with this lecture.