have come about through the lessons from our own past. the bsp together with the banking industry will remain steadfast in our reform effort. if we are to serve our public, we must continue to be responsive to their needs and to ensure that we act responsibly, mindful of the trust bequeathed by our public on us. the term “ fiduciary responsibility ” is not just a mantra that is conveniently brought out as the need arises but it is instead a social contract with our most basic constituent. this is the way forward and this is the high bar that must be set if we are to see responsive and responsible banking bear fruit. i have seen our market rise with resiliency when it was down. i have every bit of confidence to know that it will find the answer to the difficult questions when our present position is that of relative strength. it is after all, all about who we are who we serve, and, now is the time to show what we are made of. thank you very much and good morning.

two different policies, with quite different results in terms of price stability and growth, because of substantial differences in the underlying rigidities of their economies, in particular with respect to the reaction to exogenous shocks, such as an oil price increase. yet, one popular way to conduct this comparative analysis, often presented in market analysts ’ newsletters, is to estimate policy reaction functions of different central banks ( for example taylor rules ) to infer central bank preferences. this may be a quite misleading exercise, because it does not take into account the differences in the structure of the economies. 9 just to give an example, several studies analysing ecb policy come to the conclusion that it has reacted timidly to inflation. this may appear somewhat counterintuitive given the importance attached to price stability in the ecb mandate. 10 this result is instead quite consistent with what i have explained earlier, i. e. the optimal policy response to a shock depends very much on how economic agents themselves react to such a shock and on their expectation of the central bank ’ s reaction. if a shock does not lead to a permanent pass - through on inflation and the central bank is credibly committed to price stability, it is optimal for a central bank not to react. 11 looking at the estimated taylor rule coefficients only, the central bank would appear as quite dovish, while it is instead quite hawkish and expected to be so. 12 * * * moving to the end of my talk, i would like to emphasise that interacting with markets and trying to shape expectations is not an easy job. central banks are highly committed to this, and they try to do it with all the instruments that are available to them. however, it would be misleading to think that central banks act in a vacuum, with no constraints. as i have tried to explain, central banks have to face several constraints, most of which - i have to say - are often forgotten by analysts, commentators and academics. effective communication is essential because it enables the central bank to guide agents ’ behaviour and expectations, thereby keeping its policy line consistent with its objective and its assessment of economic conditions. this may require specific skills, although i would not go to the extreme of associating central bankers to artists or famous athletes, as mervyn king did in a recent speech, in which he associated a steady - hand monetary policy to the straight line followed by diego armando maradona when he scored his second goal against england in a famous