tiff macklem : central banking - navigating in a new world remarks by mr tiff macklem, governor of the bank of canada, at the 30th conference of montreal " international economic forum of the americas ", montreal, quebec, 12 june 2024. * * * good afternoon. it's always great to be back in montreal, my hometown. and i could not be more pleased to be here with joachim nagel, president of the deutsche bundesbank. thank you for visiting us in canada. since i'm on my home turf, let me start us off with a few words about where we find ourselves in economic history. key lessons from high inflation canada and germany have just come through the biggest inflation we've experienced in 40 years. and as painful as this has been, it has highlighted some lessons. i will focus on three in the canadian context. first, we ignore the supply - side of the economy at our peril. as central banks, we tend to focus on the demand side because that's what we influence with interest rates. but coming out of the pandemic, we learned that it is much easier to restore demand than supply. high inflation was a stark reminder that supply shocks can cumulate and persistand when they intersect with periods of strong demand, the inflationary consequences can be large. looking ahead, technological change, geopolitical tensions, climate change, and shifting trade and investment flows all suggest we may experience more supply shocks than we did in the past. businesses and central banks need to be ready. second, inflation is painful - that's not a new lesson, but for many of our citizens it was their first experience with high inflation. and it has been painful. inflation harms people and the economy, and it corrodes trust in our market - based system. the rising cost of living made life harder for everyone, especially those who had less to start with. people were working hard, but their paycheques didn't buy what they used to. that made people feel cheated and angry. recent history has been a stark reminder that inflation is our common enemy. the third lesson is the value of central bank credibility and public trust. we did not have that in the 1970s, and the costs of unwinding inflation were very high. this time, our track record on inflation control combined with our forceful monetary response brought inflation back down at much lower economic cost. but public trust and central bank credibility

article 105 ( 5 ) ). in view of their institutional competences the ncbs have developed the capabilities, skills and toolkits needed to analyze the stability of the financial system. the new board must, from its inception, be firmly anchored to the ecb in order to benefit from the latter ’ s well - established reputation and the direct contribution of the specialist technical and operational know - how needed to monitor the financial stability of the eu area. appointing the president of the ecb as chairperson of the esrb would help to guarantee the adoption of a consistent approach in pursuing monetary stability and safeguarding the stability of the system. the legal basis for the esrb will be article 95 of the treaty, but it would be advisable to consider appealing also to article 105 ( 6 ), under which the ecb can be assigned specific tasks in respect of prudential supervision, so that the institutional nature of the link between it and the esrb and the modalities of the ecb ’ s involvement in the latter ’ s activities may be established clearly and with the appropriate guarantees. ( ii ) linkage with micro - prudential supervision. macro - prudential supervision by the esrb can be effective only if the analyses and assessments of the risks to financial stability serve to orient the priorities of micro - prudential supervision on intermediaries and financial markets. coordination between the esrb and the esas needs to be very strong even in the analysis phase, so as to ensure a sharing of approaches and speedy and efficient exchange of information. in particular, risk assessment should be based on the extensive direct involvement of the colleges of supervisors. if the aim is to have the results of macro - prudential analyses used in the supervision of financial groups, the colleges must be able to contribute actively to identifying the main risk factors and the policy options. on the other hand, the esrb must be in a position to acquire the micro - prudential information necessary for analysis of the risks, with a special focus on large banks. the exchange of information between the european supervisory authorities and the esrb should be governed by a protocol of cooperation, so as to ensure observance of the rules on the confidentiality of supervisory data. when highly confidential information is involved, it could be sent in anonymous form. ( iii ) effective macro - prudential instruments. the esrb ’ s main instrument will be the power to send recommendations to the competent authorities. separation between the entity