mar guðmundsson : up from the depths? speech by mr mar guðmundsson, governor of the central bank of iceland, at the annual general meeting of the federation of icelandic fish processing plants, reykjavik, 24 september 2010. * * * honoured guests : i have called this speech, “ up from the depths? ”, a title that could refer to a number of things : analysis of the current situation and prospects for the future, for example, or the economic policy that could perhaps make the path swifter and / or safer. as regards the former, the questions are these : whether we have hit bottom, what the prospects are for an upswing, and how far we have to go until we achieve internal and external economic equilibrium, with a sustainable current account balance, inflation close to target, and labour and other factors of production utilised to a degree consistent with low, stable inflation. as regards the latter, the questions centre on what should be the contribution of various components of public policy in order for us to move forward on an even keel. i will touch on some of these factors in my speech today. i will assess the current situation and the economic outlook. then i will discuss how iceland can emerge from a capital controls regime and reintegrate into global financial markets – which are prerequisites for a strong upswing in investment and output. finally, i will say a few words about the growth outlook over a longer horizon. before i turn to iceland ’ s situation now and in the near future, i would like to place us in a wider international and historical context. iceland is truly a small country, and individual positive or negative shocks can trigger economic short - term developments that deviate markedly from those in the rest of the world. but in the end, the possibilities are always limited by global trends. since the latter half of 2009, the global economy has begun to grow again after the recession that followed the peak of the 2008 financial crisis, but there are still a number of questions about what will come next. output growth varies greatly from region to region, with a number of emerging economies soaring ahead while many of the developed economies hit hardest by the crisis are not growing fast enough to reduce unemployment, and near - term developments are a source of concern. at work here, to some extent, is the long - term tendency for the divide between emerging and developed countries to narrow. the trend is not necessarily a linear one, though ; it tends to play out

opening remarks by mar guðmundsson, governor of the central bank of iceland, at a conference organised by the bank and the reinventing bretton woods committee on the uncertain future of global economic integration, harpa concert hall and conference centre, reykjavik, 14 - 15 september 2017. i welcome all of you to this conference and the foreign participants to iceland. the conference is organised by the central bank of iceland and the reinventing bretton woods committee. the heading is broad and probably reflects in part the worries that some of us might currently have about the future of global economic integration. the topic encompasses both real economic integration – that is, trade in goods and services and the flow of labour and equipment across borders – and financial integration – that is, cross - border capital flows and stocks and associated activities of banks and other entities. the financial integration part will probably dominate the proceedings, not least because most of the speakers are current or former central bankers. i do not see that as a problem, as in my mind more work remains to be done in assessing the costs and benefits of global financial integration than regarding real side economic integration. after all, the post - war global economic order was initially based on the principles of free trade in goods, current account convertibility, and monetary stability through fixed but adjustable exchange rates vis - a - vis the us dollar. open capital accounts were the exception, however. real side economic integration was seen to be more important for economic progress than financial integration. it worked well for a long while, and some call the period from 1950 to 1970 the golden years. yet there were inherent flaws in this set - up that contributed to its demise in the early 1970s, not least the well - known triffin dilemma regarding the conflict between the domestic economic objectives of the country providing the main reserve currency and the required international supply of that currency. then capital accounts were opened up, with strong momentum in the 1980s and early 1990s. capital controls were increasingly undermined by technology and financial innovation, and strong arguments were being made to the effect that open capital accounts would bring significant benefits. after all, ongoing real economic integration at a global level demanded at least some degree of global financial integration. as the bis reminded us in its latest annual report – and jaime caruana might touch on in his keynote speech later in this session – trade and finance tend to go together. freer capital movements in turn undermined pegged exchange rates and thus contributed to the spread of flexible exchange rate regimes and