Financial integration, together with technological advances in financial markets and financial market instruments, is benefiting the world at large by allowing capital to be invested where returns are higher. Where are the risks? But these benefits also entail new risks. Indeed, despite better institutions, better policies and better markets, we feel more vulnerable nowadays than we used to in the past. How can we reconcile this image of a more prosperous and safer world with our increased feeling of danger? To some extent, our sense of vulnerability simply reflects advances in telecommunications that have enhanced our awareness of the world. I am not a geologist and therefore I cannot tell you whether we are now experiencing more earthquakes than we did 30 or 40 years ago. However, I do know that nowadays I am informed within hours, if not minutes, of any earthquake, flood or terrorist attack that occurs, even in the remotest corner of the planet. Our sense of security is bound to be affected by this kind of information. But it is not just a matter of perceptions. Globalisation means that we in Switzerland are indeed affected by events occurring in India, Brazil, Australia, Japan, Argentina… To a certain extent, our perception of heightened vulnerability is justified. SARS (severe acute respiratory syndrome) or "bird flu" have the potential to become pandemics of unprecedented reach because we travel more than in the past. A terrorist attack in any city around the globe will be felt immediately by investors worldwide.
In parallel to assessing future economic prospects, the European Central Bank’s governing council looks independently at the dynamics of money and credit aggregates. This has proved very useful in the past to detect long-term risks to price stability, in both directions. The message today is clear: both money and credit are growing very slowly in the euro area as a whole. The M3 money-supply aggregate grew by 2.1% in September. These trends do not signal deflation, but warrant monitoring and vigilance when facing an uncertain future. Obviously, intentions may not always suffice and must be backed, when necessary, by appropriate and timely actions. Recent decisions by the governing council regarding both policy rates and liquidity provision show that we are ready to make the necessary decisions. Many instruments remain available should further risks materialize. There should be no doubt that the Eurosystem will ensure that price stability, as currently defined, will be maintained in the euro area. 2  BIS central bankers’ speeches