christian noyer : inflation, financial innovation and monetary policies – some contemporary challenges speech by mr christian noyer, governor of the bank of france, at the gic and cepii conference, paris, 13 may 2008. * * * inflation pressures are now at work in most parts of the world. today, i would like to start with offering some comments on this worrying development and then elaborate on the challenges raised by financial innovation for monetary policies. the current rise in global inflation appears in stark contrast with the price stability recorded over the past decades. during the last twenty years, globalisation has made a significant contribution to price stability. with new large players ( such as china and india ) entering the world economy, cheap imports of manufactured goods have become available to developed countries. the fall in import prices has allowed real consumption wages to grow without impacting real production wages. this, in turn, has lowered the inflation rate for any given level of employment. in parallel, the effects of globalisation have been felt more indirectly through increased competition, both on products and labour markets. inflation dynamics have also changed. maybe the most documented and commented - on of these changes has been the so - called flattening of the phillips curve. this, in economic jargon, means that domestic inflation has become less sensitive to the domestic output gap, or, alternatively, that it has become more stable during the business cycle. there are several possible – and not mutually exclusive – explanations for this phenomenon. expectations may be more solidly anchored, which would lessen the impact of the output gap on current inflation. it is also possible that, as a result of structural reforms, the nairu has decreased in many countries in recent years, thus giving the " optical " impression of a horizontal phillips curve during this period. in a broader sense, globalisation itself may also be responsible for the flattening of the phillips curve. in an open economy, domestic demand changes can easily be satisfied through increased imports. as a consequence, domestic inflation may become less sensitive to the domestic output gap and more sensitive to global tensions on production capacities. overall, these developments have made it easier for central banks to bring down inflation without real costs to the economy. but it is clear, today, that these effects are being reversed. the prices of oil, food and other commodities are now increasing fast. there might be three reasons for this rise ( the importance of which is currently hotly debated ) : first a supplydemand im

jean - claude trichet : central bank cooperation after the global financial crisis video address by mr jean - claude trichet, president of the european central bank, at the bank of korea international conference 2010 “ the changing role of central banks ”, seoul, 31 may 2010. * * * ladies and gentlemen, first, let me congratulate the bank of korea on its 60th anniversary. the bank has made essential contributions in korea ’ s economic development, the reform of the country ’ s financial system and its integration into the global financial system. the clear focus on controlling inflation and the strengthened independence further buttressed the role of bank of korea in the economy. and recently, the bank ’ s timely and decisive measures helped korea weather the global financial crisis. hence, there are many reasons to congratulate and wish bank of korea a very happy birthday! * * * let me now say a few words about central bank cooperation during and after the crisis, which the bank of korea is so closely involved in. the cooperation among central banks has recently taken numerous forms, such as information sharing and the setting of general standards and rules. such cooperation has been mainly channelled through the various fora at the bank for international settlements ( bis ) in basel. these include the governors ’ global economy meeting and the other committees that meet under the aegis of the bis as well as the financial stability board. the global economy meeting comprises the esteemed governor kim and some 30 other governors from all systemically important economies. it is held every two months in basel and provides a unique opportunity to discuss the global economic outlook, policy challenges as well as any other topics of mutual interest. until january this year, the global economy meeting was primarily concerned with assessing global economic and financial conditions. since then, it was entrusted with an additional assignment : it now provides guidance to, and formally decides on, issues discussed by the various basel - based central bank committees. this responsibility had been in the hands of g10 governors for decades. i have the privilege to chair the global economy meeting and find the frank and in - depth discussions of invaluable importance for my own work and for the central bank community at large. central bank cooperation is part of a more general trend that is reshaping global governance, and which has been spurred by the global financial crisis. one distinctive aspect of this crisis has been its originating in industrial economies. emerging countries have also been severely affected, but as a group remained a source of strength for the