Inflation in the euro area is likely to have been 0.0-0.3 percentage points lower per annum as a result of the net impact of the inflation-dampening effect of non-commodity import prices and the inflationaugmenting effect of commodity import prices over the past decade. 12 The two effects are linked and have partly offset each other as they reflect the impact of emerging market economies on the prices of manufactured goods and world commodity prices. The size and sign of the net impact on the inflation of advanced economies in the future are surrounded by uncertainty, and are likely to change as globalisation unfolds. 11  See Boivin and Giannoni (2006) and Bean (2005). 12  See ECB (2008); Pain et al (2006) and Pula and Skudelny (2007). 4  BIS Review 9/2008  Impact on monetary policy strategies Do central banks need to adapt their monetary policy strategies to cope with the challenges of globalisation? It has been shown that the rationale for maintaining price stability – the primary objective of the ECB and of many other major central banks – is strengthened by financial globalisation for at least two reasons. First, if international risk-sharing loosens the link between domestic consumption and domestic output, optimal monetary policy would tend to increase the relative weight on price stability at the expense of output variability, as it is real consumption which ultimately matters for social welfare.
In this timeline of measures to preserve monetary stability since 1800, 1848 marks a turning point because, with the opening of branches in Bordeaux and eight other French cities, the Banque de France became the central bank for the entire country, for three reasons: First, it unified local payment systems by creating a single nationwide multilateral settlement system through its branch network. Banknotes then circulated over all the French territory with the same value, and the ability to transfer money between branches slashed and standardised the cost of wire transfers for economic agents. Second, it could perform in each financial centre a single supervision of what was essentially local banking businesses, greatly lessening the financial instability that had plagued France off-and-on between the fall of the Empire and the Revolution of 1848.7 Harnessing its in-depth knowledge of business and banking communities, which was shared between each branch and the head office, the Bank was able to implement prompt corrective actions or step in to ensure the recovery or resolution of struggling financial institutions. Faure, Edgar, 1977, La Banqueroute de Law, 17 juillet 1720, Paris, Gallimard “Trente journées qui ont fait la France” for a complete description of the Law system, and Courtois, 1875, previously cited, on attempts to set up a central bank before the Banque de France. 6 Sargent, Thomas and François R. Velde, 1995, Macroeconomic Features of the French Revolution, Journal of Political Economy, Vol. 103, pp.