What can a central bank do to counteract the dangers presented by globalisation? The stance of the Bundesbank on this has been quite clear. Let me say it again: a good policy creates incentives for market players to cope consciously with risks on their own. Thus, a good policy need not set new controls on, or obstacles to, international capital movements.
Rather, a good policy excels in shaping appropriate underlying macroeconomic conditions. For it is precisely when stable monetary conditions are lacking that the risks associated with financial assets become difficult to evaluate. I think this stance is appropriate, at least for the large, developed economies with mature financial markets.