the crisis. in addition to the complications from eventually implementing effective exit strategies once inflation risks emerge, this stance have induced investors to search for higher yield, in the process assuming more risk. the resulting capital movements have tended to inflate the prices of certain assets, including the currencies of emerging market economies. even though the migration of funds could soon prove to be transitory, since 2009 the governments of various countries have been implementing measures intended to avert the appreciation of their currencies. these actions include some varieties of capital controls and central bank interventions in foreign exchange markets. however, capital controls may lessen investor confidence in these economies, generate black markets, and inhibit the entry of capital necessary for innovation and productivity improvements. currency interventions, in turn, are hardly effective and tend to impose financial losses on the central bank. furthermore, the most important threat generated by these actions is a widespread movement toward protectionism that could hamper the sustained recovery of the world economy. thus, it is preferable to completely avoid these measures. conclusion the global crisis has revealed the importance of establishing conditions to ensure the continuous functioning of the financial system. to lower the likelihood of financial collapses, an indispensable prerequisite is for economic policy never to become a source of problems. additionally, a preventive, rules - based approach to the regulatory and supervisory framework of financial institutions is a prerequisite for generating adequate incentives. the crisis confirmed that the “ hands - off ” approach in dealing with early warnings of risks was too costly in terms of the eventual instability that ensued and the unprecedented policy measures later undertaken, which now imply future restrictions. corrective intervention measures should be viewed as a “ second best ” solution, to be used only to overcome deficiencies in the preventive regulatory approach. finally, monetary policy is ill suited for directly abating bubbles. given that bubbles are relevant to the extent that they may weaken the financial system, it is better to use regulatory and supervisory tools to target the source of problems. moreover, the scope of a new central bank paradigm should be viewed with caution, especially if it implies the underestimation of the contribution of price stability to financial stability. also, the risks associated with the unprecedented monetary measures undertaken by the central banks of developed nations to offset the consequences of the crisis include the threat of protectionism, something that should by all means be avoided. references adrian, tobias and hyun s. shin ( 2009 ) “ money, liquidity and monetary policy

help businesses survive and save jobs. banks and pension companies can contribute by securing access to funding for businesses and helping households survive the worst times. in this comprehensive national effort, banks operating in finland can also be expected to participate fully, particularly as their capital requirements have just been eased and the terms of credit obtained via eurosystem refinancing operations are now very favourable. * * * but, of course, the central banks also have their own responsibilities and mandates. 4 / 5 bis central bankers'speeches the key issue is to secure the financing of companies and households. this is the aim of the ecb ’ s extensive measures, the bank of finland ’ s purchases on the corporate commercial paper market and the financial supervisory authority ’ s decision to lower capital requirements. in europe, the pandemic is a problem for everyone. the difficulties are not the result of reckless economic management in any country. what is needed now is european solidarity. this pertains to both the ecb ’ s activities and the management of the public finances. a common fiscal stimulus is also in finland ’ s interest. the current crisis is global and also concerns a wide range of finnish businesses, employees and households. in responding to the crisis, cooperation is of paramount importance : cooperation between central banks, cooperation between european countries, and cooperation between domestic policymakers. finland has in the past come through even more difficult situations. i am confident that, despite the need to keep a physical distance from each other, we in finland are ready and able for such national cooperation as is necessary to overcome this crisis and alleviate the damage following in its wake, in a just and fair way. thank you! 5 / 5 bis central bankers'speeches