Central banks have borne much of the burden of supporting the global economy as it has recovered from the global financial crisis. In some advanced economies, such as the UK and US where the output gap has largely been closed, that extraordinary monetary support is now being gradually withdrawn. In others, such as the euro area, a gradual withdrawal has been clearly signposted. The gradual withdrawal of exceptional monetary stimulus is unlikely by itself, however, to remove entirely the weight from central banks’ shoulders. Many have acquired new powers and new responsibilities since the crisis, particularly in the regulatory sphere. At the same time, the crisis has dented trust in the financial sector, including in central banks. In combination that has raised expectations, but also some doubts, about the role of central banks in serving society. 1  Central banks have, over the course of the recent past, undergone a revolution in their degree of transparency and accountability. This has delivered huge gains. By improving public understanding, it has helped stabilise the economy and the financial system. And by improving public accountability, it has allayed concerns about central banks being over-powerful and under-accountable to the societies they serve. But time has moved thing on and, as in the past, central banks will need to move with the times. In response to greater levels of responsibility, but more fragile trust, I will argue a second revolution in central bank practices may be needed.
José De Gregorio: Adjustment in the global economy Keynote address by Mr José De Gregorio, Governor of the Central Bank of Chile, at the 2011 Institute of International Finance (IIF) Latin American Economic Forum, Calgary, 27 March 2011. *  *  *  I am grateful to Luis Oscar Herrera, Enrique Orellana and Tatiana Vargas for valuable comments. Thank you very much for the invitation to speak at this 2011 IIF Latin American Economic Forum. The last few years have been the most challenging for economic policy around the world in many decades. From an unprecedented inflationary shock in 2007–08, the global economy went through a financial crisis and a recession in 2008–09, of a scale not seen since the Great Depression. Now, we are experiencing a process of recovery with strong inflationary pressures and tensions in the world economy as a result of asymmetries in this process. The purpose of my talk today will be the global adjustment, how it has been proceeding and what the current challenges for policymaking are, with special focus on the asymmetries and their implications for economic policy. The uneven recovery The world economy is growing unevenly and subject to many tensions. Most advanced economies are recovering from the crisis, but they still have high rates of unemployment and excess capacity, and this is expected to last for some time.