BIS Review 28/2002  3  The fact that the credibility of monetary policy can potentially be frustrated by inappropriate fiscal policy—a theme to which I will return later—is one of the reasons that it is essential for both the government and the central bank to sign on to an agreement.
The long-standing uncertainty surrounding global geopolitical and economic developments has been reflected in financial markets, which have recorded heavy losses. Tensions in Europe are also affected by the relatively limited depth of some market segments, especially when compared with those in the United States, as well as by continued high fragmentation along national borders, above all in retail activities.