For that, we can boast two major achievements, while acknowledging that each of them poses two challenges that we will discuss today: Thanks to international cooperation including the IMF, we successfully responded to the Great Financial Crisis (GFC). But, today, we are being challenged on monetary policies, and on the safeguarding of financial stability. Along with the World Bank and the IMF, we have well supported the prodigious development of globalisation. But today, we are being challenged by the calling into question of free trade, and by aspirations for other “global public goods” – starting with climate change and social inclusion. A. Two challenges after managing the GFC I. Monetary policies, ten years after There is no doubt that monetary policies played a key role in helping to overcome the GFC, thanks to two major differences compared to the 1930s, innovations and cooperation. However, they are now being challenged, on the “upside” – by ever increasing demands – and on the “downside” – by criticism of prolonged low interest rates and non-standard policies. Today, it seems all the more important to me to restate three principles: Monetary policies cannot do everything, and cannot perform miracles. They cannot repair the damage caused by protectionist uncertainties; they can neither replace reforms conducive to long-term growth, nor more growth-enhancing fiscal policies. Monetary policies in the major advanced economies are guided by their sole domestic mandate: price stability and contracyclical demand management. They are not targeting exchange rates.
This is the fruitful paradox of recent years: the coexistence of “domestically focused” policies that results in a “globally-cooperative” monetary environment. And for this purpose, monetary policy must be conducted in full independence. That is, independently of political powers, of course, and we regret to have to say it again. But also 1/3  BIS central bankers' speeches  independently of short-term pressures or any particular economic interests. So we take account of market indications, but we must not be market dependent; this includes not relying too exclusively for inflation expectations on market-based measures. We are data dependent and I say this in particular for the ECB: in our coming Governing Council meetings, we will assess actual economic data and we will act accordingly if and when needed. II. Financial stability issues and crises On financial stability issues, the Bretton Woods system has undergone numerous disruptions and crises since its inception, including its quasi break-up in 1971. And a decade after the GFC, we still have to define the future of our current international monetary system, or “non-system” as many describe it. Today we will discuss financial stability risks caused by the growth of cross-border flows and financial assets. Over the past few years, international capital flows have been too abundant in good times, – potentially fueling domestic bubbles and destabilising national financial systems – but also prone to “sudden stops” in bad times.