needs to boost the supply of equity finance. policies which stimulate individual ownership of traded shares, such as reducing the tax advantage of debt over equity or enhancing financial literacy, can have a material effect on public equity markets in europe. at the same time, because stock markets often penalise companies which undertake radical, but uncertain, innovative activities, the contribution of private equity – particularly in the form of early - stage venture capital finance – is indispensable, as a critical mass of angel investors who can provide financing for medium - size projects is also needed. only with a deep, liquid market is it possible to launch ipos of successful projects that can offset the losses with projects that fail. harmonising insolvency rules across jurisdictions would be a major step towards supporting capital markets. this is critical for mobilising finance through capital markets, as it would create incentives and favourable conditions for institutional investors to overcome the home bias in their investment strategies. this is especially true for pension investment, as large private pension funds tend to be a complement to deep capital markets. we need to establish a harmonised regulatory environment for new types of finance, such as crowd funding. the emergence of increasingly complex financial products needs to be accompanied by adequate consumer protection of financial investment, in order to safeguard financial stability and ensure the protection of individual investors. the second component of a comprehensive approach entails policies that will stimulate entrepreneurship. high - tech entrepreneurial firms that aspire to go public should be supported and facilitated by stock exchanges specialising in ipos for young innovative companies. a reduction in the wedge between corporate income taxes and personal income taxes has already been shown to have a strong positive effect on high - tech investment in a european context. 21 last but not least, the efficient application of r & d tax incentives and increased public funding of private research universities, whose labs often make key scientific and technological breakthroughs, are other important avenues for stimulating innovation and the commercialisation of science. conclusion let me conclude. so far, measures adopted in the context of the cmu initiative, albeit positive and helpful, are not yet commensurate with the ambition of the project. with cmu, we should aim to reach a situation where both issuers and investors enjoy the same basic legal rights concerning capital markets activity regardless of the eu country where they are located. the cmu project involves all eu member states but it is particularly important for the euro area member countries. it is a big waste to have taken the huge step to

into our framework. this includes the use of extended monetary policy tools when needed and the increased emphasis we have been placing on the health of the labour market. today, i want to briefly review our experience with flexible inflation targeting. i will then turn to the comprehensive review of our framework that we conducted over the past three years. and, importantly, i will focus on our renewed agreement and what it means as we pull out of this pandemic and prepare for the postpandemic economy. our experience with flexible inflation targeting monetary policy in canada has been anchored by an inflation target for 30 years. despite major external shocks — from the 2008 – 09 global financial crisis to the covid - 19 pandemic — inflation has remained much lower and more stable than it was prior to inflation targeting. in the 15 years before we began inflation targeting in 1991, inflation, as measured by the 12 - month rate of change in the consumer price index, averaged 7. 1 percent. since then, it has averaged 1. 9 percent. the unemployment rate has also been lower on average. 1 low, stable inflation has delivered clear benefits for canadians. it has made it easier for households and businesses to plan for the future and has improved the functioning of labour markets. keeping inflation low and stable has protected lowincome canadians and those on fixed incomes from the loss of purchasing power caused by higher inflation. the bank ’ s success in hitting the target on average over time has built credibility for both the target and the bank. and inflation expectations that are well - anchored on the target have been a stabilizing force when the economy has been hit by shocks. 2 three elements of the framework have been key to its success. first, the target is symmetric — we are equally concerned about inflation rising above or falling below the target. second, monetary policy is forward - looking. policy actions take time — usually six to eight quarters — to work their way through the economy. that ’ s why our policy decisions are based on where inflation is likely to be in the future, not where it is today. and third, our framework is straightforward to communicate and has come to be well understood. 1 since moving to the 2 percent inflation target in 1995, the unemployment rate has averaged 7. 4 percent, compared with 8. 9 percent in the 15 years before we had an inflation target. taking a long - term perspective underscores the amazing success of flexible inflation targeting. we first started collecting data on inflation in 1913