the need for a stability - oriented domestic monetary policy. this principle applies all the more to the current environment of elevated inflationary pressures and heightened financial market tensions. of course, i do not intend to invoke the impression that the globalisation of goods and financial markets has not altered price dynamics and transmission forces. to the contrary! but the bottom line of my arguments is, that globalisation ultimately raises the degree of uncertainty with which monetary policy decisions are taken. uncertainty, however, is something we are confronted with as policy makers on a almost daily basis. it asks for a robust monetary policy strategy. robustness in that context implies a broad analysis of monetary and economic indicators. but it also means a clear and wellknown strategic framework that puts price stability to the forefront. to put it in dylan ’ s words : globalisation certainly “ holds the wheel in spin ”. but it does not change the fundamental direction of a stability - oriented monetary policy, nor the need to take a medium - term view, because “ the times, they are a - changin ”. globalisation : basic remarks and characteristics let me start with some basic observations regarding globalisation. globalisation is a term referred to pretty often in the media, and by politicians and economists. however, there is no single definition of what globalisation actually means nor is there a single key figure for measuring its scale and evolution over time. to me, a useful starting - point is, quite fundamentally, the notion that globalisation describes the ongoing process of the international division of labour. in the wake of this process, the domestic markets for goods and services, as well as labour markets, are becoming more and more interlinked and interdependent internationally. in the absence of a single yardstick to gauge the extent to which globalisation is evolving, it is useful to look at various developments that, in combination, capture this process. let me just pick out two distinctive developments. first : the steadily rising volume of global trade, whose growth rate has been exceeding that of global gdp for a long time now. on average, global trade has grown 50 % faster than world gdp over the past 35 years. during the 1990s, global trade even grew twice as fast as global gdp. among the factors explaining this development are a number of developments which have particular relevance : more and more goods and services are becoming tradable. in addition, more companies and economies have become involved in foreign trade. let us briefly look at

some figures : a ) as a result, the degree of real economic openness of many countries has increased significantly ( as measured by total exports and imports of goods and services as a ratio of gdp ). for example, in the german case, the relevant figure amounts to roughly 75 % at the current juncture, compared with just over 60 % in 1990. b ) global trade is also boosted by the ongoing internalisation of production structures. these are most visible by looking at the growing stock of fdi. according to unctad figures, worldwide fdi stocks amounted to over 26 % of world gdp in 2006. in 1990 the corresponding number was less than 9 %. in germany the relevant numbers increased form 8. 9 % to nearly 35 %. the german development roughly corresponds to the norwegian numbers ( 9. 4 % / 36 % ). second : the increasing openness of many economies in financial terms, measured by the ratio of the sum of external assets and liabilities to domestic gdp. for germany, this figure currently amounts to roughly 375 %, which is more than three times as high as in 1990. compared with other developed countries, germany is among those group of larger economies that have the highest degree of financial openness. in addition, the increasing financial openness of many economies has also been reflected by strongly rising international capital flows, for example, in terms of cross - border securities transactions. the process of globalisation has been evolving among developed countries for many decades now. therefore, in contrast to what some observers might think, the current process of globalisation per se is neither new nor of special recent relevance. however, the pace of this process has been increasing rapidly for more than a decade now. in particular, declining costs of telecommunication and transportation have been the main drivers of this development. in addition, skill levels in many regions of the world have improved considerably as has the quality of goods and services produced in formerly rather underdeveloped countries. what has changed the face of globalisation is the fact that globalisation nowadays extends to a larger group of countries than in the past. more and more countries with formerly rather closed economies have opened themselves to the world market. thus, new players have entered on to the global stage and are becoming increasingly relevant economic powers and, as a result, competitors to established developed countries. as a consequence, the process of globalisation is leading to a shift in weights within the global economy. this shift is nothing exceptional. it is quite a natural