that these policies focus on individual behaviour, and given that these policies can have distributional consequences thus requiring broad political support. these decisions are outside the realm of ( independent ) central banks. the bundesbank, for example, is a member of the german financial stability committee but has no responsibilities with regard to consumer protection. at the same time, the typical division of labor often prevents an efficient coordination between the different policy areas. i thus see two main areas for cooperation between authorities in charge of macroprudential policies, financial education, and consumer protection. seite 16 von 27 deutsche bundesbank, directorate general communications wilhelm - epstein - strasse 14, 60431 frankfurt am main, germany, tel : + 49 ( 0 ) 69 9566 3511 or 3512, fax : + 49 ( 0 ) 69 9566 3077 presse @ bundesbank. de, www. bundesbank. de reproduction permitted only if source is stated. develop common data and evaluation strategies developing common data and evaluation strategies can be an important area of cooperation between policies that aim at enhanced financial literacy and financial stability. the indicators that are relevant to monitor the sustainability of individual - level finances are very similar to those needed to assess the stability of the financial system. as regards the housing market, for example, loan - to - value ratios and debt - to - income ratios are relevant, at the level of households and of the financial system. also, information about financial knowledge might be relevant for financial stability analysis. hence, defining data requirements needed for the monitoring of risks jointly across the policy areas can be an important contribution to reducing reporting costs and ensuring consistency of indicators. similarly, assessing the effects and the effectiveness of policy interventions related to household finance ( consumer protection ) and financial stability will rely on similar microlevel mechanism. developing common protocols and strategies for policy evaluation can be useful. develop common narratives a second area where different policies can benefit from closer cooperation is communication. often, the narratives that can be used to explain why policy measures are needed are very similar. for example, the resilience of individual households with regard to shocks to the mortgage market is related to loan - to - value and debt - to - income ratios. similar indicators matter when assessing the probability of a systemic crisis to the mortgage market and its severity. explaining financial stability issues can thus build on narratives that are related to individual experiences with the assessment of credit risks. at the same time, communicating financial stability needs to

nationally and internationally. however, from the current perspective, the risk of a credit crunch in germany is fairly remote. in summary, the driving forces behind the current upswing of the german economy remain fundamentally intact. as a consequence, i see no compelling reason to paint a bleak growth scenario for the german economy in the ongoing year. the eurosystem ’ s monetary policy stance strong upward pressure on global inflation can, to a large extent, be explained by sharp hikes in energy and food prices. a combination of protracted and robust global economic growth and increasing capacity constraints drove commodity prices to new record highs. consequently, inflation has increased markedly all over the world, a development which, in industrialised countries, has been particularly pronounced since the second half of 2007. this is also true of the euro area. the annual harmonised index of consumer prices ( hicp ) rose to a worrying 3. 6 % in march. this is the highest rate since the euro ’ s launch in 1999 and well above the eurosystem ’ s definition of price stability – inflation rates of below 2 % in the medium term. looking ahead, energy and food prices are likely to keep the eurozone ’ s inflation rate at elevated levels for longer than initially expected. hence, we will witness temporarily high inflation rates for a more protracted period than previously anticipated, though rates will eventually decline towards 2 %. what does such an outlook mean for the eurosystem ’ s monetary policy stance? to put the issue into a broader perspective, let me note that a central bank cannot adequately react to the ( temporary ) first - round effects stemming from increases in oil and food prices, indirect taxes and the like. nor should it attempt to do so, since a change in monetary policy impacts on the price level only with a considerable time lag of several quarters. consequently, a central bank reacting mechanically to first - round effects would be likely to do more harm than good. in the medium run, however, the persistence of high energy and food price inflation is cause for serious concern. protracted relative price changes may translate into medium to longerterm inflation expectations becoming less well anchored and drifting slowly over and above a central bank ’ s price stability threshold. elevated inflation expectations could give rise to a damaging wage - price spiral, thereby generating the so - called “ second - round effects ”. given the costs of curbing such inflation dynamics once they have started, the stability - oriented eurosystem has to fight the risk of