Five specific challenges were discussed, namely : (a) managing national monetary policy decisions in a globalizing environment, given the growing complexity in the interactions between external developments and domestic variables, (b) redefining the mandate of central banks, given the pre-crisis attraction of inflation targeting and the post-crisis debate on the role of central banks in relation to asset prices, (c) responsibility of central banks towards financial stability, particularly beyond the conventional Lender of the Last Resort (LOLR) function, (d) managing the costs and benefits of regulation, in view of the difficulty in drawing a fine balance between regulation and financial innovations, and (e) the autonomy and accountability of central banks, particularly during exit from the crisis.
Although indications are that initial expectations of a vigorous recovery in real economic activity were too optimistic, business confidence rebounded in the third quarter of 2010. Despite the negative sentiment brought about by rising unemployment, the level of consumer confidence remained almost unchanged in the second and third quarters of 2010, following a strong recovery in the first quarter.