Against this backdrop, it seems appropriate to dedicate this year’s conference to taking stock of the transformations that have occurred in monetary policy, if not in the objectives, at least in the tools by which these objectives are achieved. Moreover, such introspection seems crucial to our understanding of how to go forward. Indeed, it is very likely that such measures will become standard practices, with the subtitle “unconventional” eventually scratched off altogether. In fact, there are several reasons to suspect these exceptional measures are here to stay. On the one hand, it might very well be the case that we are witnessing profound structural changes that imply a new normal of much lower interest rates that we have been accustomed to –I suspect the keynote address by Larry Summers tomorrow may touch upon such issues. If this is so, then it is more likely that we will run into the ZLB in future business cycles, forcing central banks to tap upon these so-called unconventional measures time and again. On the other hand, these measures have apparently worked. Why then should we not embrace them as part of our standard set of instruments? The structure of this conference follows the logic of addressing three main aspects of the transformation in the practice of Monetary Policy in the last decade. Our first session includes three papers that tackle, from both a theoretical and empirical perspective, the impact of such unconventional measures on interest rates at different horizons and over a wide variety of securities.
It contains a commitment, for example, to reduce the burden of public sector expenditure on the productive areas of the economy, and targets a 6 percent reduction this year. It also provides new incentives for investment in R&D by the private sector and more generous allocations for the development of industrial areas. As far as the labour market is concerned, new training and placement programmes are envisaged for persons who lack skills and for the long-term unemployed, especially those interested in setting up their own business. There are also plans to establish a register for those seeking part-time employment, along with incentives that should encourage a greater take up of temporary employment as well as labour market participation after pension age. In the education sector, a wide range of measures are envisaged aimed at improving the quality of education. There are also plans to offer land to international educational institutions interested in developing campuses in Malta. This year will also see a record amount of funds allocated for higher education, including for the creation of an ICT faculty, the modernisation of science and engineering laboratories and additional investment in e-learning facilities. In this same area, a new ICT strategy has been launched which aims to establish Malta among the top ten Smart Islands by 2010. The strategy aims at improving further the ICT infrastructure, the diffusion of next generation applications and at creating the right environment for large projects that are in the pipeline, including the Smart City by Tecom Investments of Dubai.