Moreover, decisions based on an arbitrary value of money cannot be sound, which is why stable and low inflation is a precondition for solid growth in the economy. The profitability of an investment project can only be calculated correctly when inflation is in line with expectations. Accounts tend to be misleading and equity prices uncertain if the purchasing power of money is not stable. The tax system, with its rates and thresholds in krone terms, impairs the distribution of resources to a greater extent when inflation is high and variable. The value of money and inflation have now been stable for almost 20 years. In earlier times, the value of money was more variable, and periods of high inflation tended to be followed by a fall in prices. The value of money fell sharply and permanently around the time of the two World Wars and earlier wars. In the 1970s and 1980s, the value of money also fell rapidly, but as a result of economic policy. The interest rate was kept at a low level and public spending was high in an attempt to achieve very low unemployment. 12  BIS Review 15/2010  Not only in Norway, but worldwide, there was a crisis in the monetary system in the 1970s. After the Second World War, the US dollar was pegged to gold while other countries held a fixed but adjustable exchange rate against the dollar.
The management of the Global financial crisis and its aftermath in the advanced economies have highlighted the importance of this aspect of leadership. How then do we unleash and harness the leadership energy to perform and be effective in this new and more challenging environment. It lies in self-hacking the mind and the heart. We can draw inspiration from the brain-training secrets of the Olympic athletes which start with oneself and the ability to tap into our internal reservoir of strength. Just like athletes, one can tap into this impressive mental prowess to train the mind to remain focussed eliminate distractions, reduce stress and anxiety and build the stamina needed to achieve optimal performance. In the business of Central Banking – a business that I have described as being “an unfinished business” because there are always new challenges on the horizon, endless demands emerging in an ever changing and more complex environment and great  BIS central bankers’ speeches  1  expectations that the Central Bank will provide the solutions and the necessary actions to resolve the monetary, financial and economic problems that continue to confront our world. In conditions of financial and economic crisis, a phenomenon that has now become more frequent, in which Central Banks are at the forefront in its management. The drive to deliver in the face of great odds from my experience has been about having great focus on the results and goals to be achieved and a strong conviction of how this might be pursued.