tightening of financial conditions. naturally, there are reasons for these decisions ; since a full discussion of these developments would take me too far afield here, let me just emphasize that the decisions are a good example of the complex way in which monetary, micro - bis central bankers ’ speeches and macro - prudential policy decisions interact. a number of regulatory developments complicate matters still further : to mention only a few, consider the ongoing phase - in of the capital rules, the adoption of stringent liquidity requirements, the introduction of the tlac framework, and the implementation of the brrd. 3. the question, in conclusion, is how we should steer micro - and macro - prudential tools towards the objectives of stability and growth. our answer will be crucial for the euro area and italy, where banks play a predominant role. i am sure that daniele and claudio will help us to advance our understanding of this critical issue. my own answer is strong, close coordination. ensuring consistency between micro - and macro - prudential policies – and, based on what i have just said, monetary policy as well – is absolutely necessary to support the economic recovery. as i have already observed, guaranteeing a strong capital base was essential to regain full confidence in the solidity of the european banking system and to provide adequate financial support to the real economy. but capital strength cannot be the sole line of defense against the risk of bank instability ; if it were, the job of supervisors would be much easier than it is. what is more, the particular path by which stronger capitalization is attained is not a matter of indifference. micro - and macro - supervisors need to devise a balanced, coordinated modus operandi. the best guarantee that such an arrangement can be achieved in the eurozone is the institutional setup, which assigns macro - prudential powers to national competent authorities as well as to the ecb governing council and the ssm supervisory board. events like this conference can certainly make a valuable contribution to the current debate. thanks again to universita cattolica, to the speakers and to all of you for your participation. bis central bankers ’ speeches

the quantitative zeal of that time may appear simplistic, perhaps even dogmatic today, we need to consider that the monetarist narrative, together with the contemporaneous theoretical rationalisation of having a ‘ conservative ’ and independent central banker, was likely a key factor in strengthening central banks ’ resolve to pursue their stabilisation policies, despite the significant costs and highly vocal opposition. simplistic and dogmatic attitudes waned considerably in the 1990s, as more flexible inflation targeting strategies gradually took hold. at the turn of the century, although the ecb ’ s initial strategy continued to acknowledge the primacy of the monetary ‘ pillar ’ in a formal sense, at least for signalling purposes, the information content of the aggregates appeared to decrease over time and the focus on them diminished. after all, for twenty years, inflation had been so moderate – also owing to global factors independent of monetary policy in europe and elsewhere – that it was difficult to identify robust econometric relationships between prices and monetary aggregates. at the end the issue of the equivalence between rules based on the interest rate and rules based on the quantity of money is addressed at length by john taylor in his foreword to this edition of a monetary history of the united states ( pp. xiiss. ). of that period, no one was looking at the statistics on monetary aggregates any more. if anything, they were looking at those on credit and were mostly concerned with avoiding unwanted credit tightening measures. however, perhaps looking afresh at a monetary history might make one wonder whether a total disregard for the quantity of money is as one - sided an attitude as was the obsessive focus on it of the previous generation. unlike f & s, we believe that v is far from being ‘ extremely ’ stable ; that it depends – besides on the economic cycle, as f & s also recognised35 – on technology, custom, opportunity cost, and on many other factors we do not grasp very well. yet precisely because we do not grasp them very well, and because we have observed sharp changes in one direction, we cannot rule out that, if the underlying conditions change, equally strong changes could occur in the opposite direction. while the global ‘ reserve army of labour ’ has long kept inflation down in the advanced countries, thereby preventing the inflationary potential inherent in the strong global accumulation of liquidity in recent years from materialising, an equally exogenous factor such as an energy price shock could trigger it. the sizeable