olli rehn : impact of structural economic changes on monetary and macroprudential policies keynote speech by mr olli rehn, governor of the bank of finland, at the 2019 risklab / bof / esrb conference on systemic risk analytics, helsinki, 24 may 2019. * * * ladies and gentlemen, welcome to the bank of finland. i want to thank the co - organisers, the european systemic risk board and risklab, for the opportunity to share my thoughts at this conference on systemic risk analytics – not least because in the aftermath of the global financial crisis, the maintenance of financial stability has regained its original position as the second key pillar of central banking policy. this comeback stems from certain permanent features of our economies and their development. modern economies are in constant change. some changes are cyclical. economic variables like gdp, housing prices and the volume of lending often increase strongly in upturns and decrease equally strongly in downturns. at times, economies are hit by booms. at other times, they are hit by downturns and recessions. economies are also subject to more fundamental, longer - term changes. in economic history, major changes in technology, population growth and economic systems have had sweeping effects on economic growth, the welfare of citizens and the birth and death of occupations and industries. it is our task – as economists, social scientists and other scholars – to try to identify the key short - term and long - term economic changes and to weigh their consequences, benefits and risks. the policymakers´ challenge, in turn, is to make proper adjustments in their economic and other policies when old policies become outdated for the new world. in this keynote, i try to identify some major ongoing economic changes that in my view require a rethinking of current monetary policy strategies and macroprudential policies. structural economic changes and monetary policy let us start from the monetary policy, in general and in the euro area. before addressing the longer - term issues, it may be worthwhile to remind ourselves of the major economic recovery that has taken place in the euro area since 2013. in five years, more than 10 million new jobs have been created. unemployment – although still too high – has declined by 4 percentage points to below 8 per cent. the accommodative monetary policy of the european central bank has substantially contributed to the recovery. recently, the global growth outlook has been shadowed by significant uncertainty. the trade tensions between the us and china have escalated

of today and tomorrow, as we are in the middle of the climate - and energy - related economic transformation, with very substantial needs of sustainable finance and investment. all in all, the enhancement of financial stability and economic growth should continue to be key priorities in developing the economic and monetary union. the future of emu is too broad a subject to be covered here in depth, but i see a lot of merit in the manifesto of 14 german and french economists, published last year. the manifesto is essentially a synthesis of “ german ” and “ french ” economic thinking, aiming at creating a genuine stability union by uniting sound incentives and rules with a sufficient dose of insurance and stabilization. to wrap up, modern economies are indeed in perpetual change. economics, as a science, provides tools for understanding these changes. policymakers, in turn, need to have the wisdom to adapt their strategies and policies if and when their old ways turn out be inadequate. and – as always in economic history – economic changes will bring new, unforeseen systemic risks. we should make our economic systems and architectures resilient enough to withstand the realisation of such risks. and as central banks, we need to keep our powder dry, just in case if some known or unknown risks nevertheless start to materialise. with these thoughts, i thank you for your attention. 4 / 4 bis central bankers'speeches