It is hugely more complex than macro-economic management, being affected as it is by the whole range of public policy issues, often involving difficult political judgements on how to strike the right balance between social and economic considerations. I will have little more to say about the supply side. My involvement is on the macro-economic side. Macro-economic management can do relatively little directly to contribute to improvement on the supply side, but - if we succeed in maintaining stability we can nevertheless contribute to more rational economic decision-making by the private sector, based upon real rather than purely nominal considerations; and that can help improve our supply-side performance indirectly. As the emphasis of macro-economic management - overall fiscal policy and monetary policy taken together - shifted towards stability, a growing distinction emerged between the role of overall fiscal policy, which is set for the medium term, and a more specific role for monetary policy, which became the principal instrument for shorter-term stabilisation. This distinction crystalised first with the adoption of an explicit inflation target as the objective of monetary policy, following our exit from the ERM in 1992, and subsequently, in 1997, when the Bank, through the Monetary Policy Committee, was given independent operational responsibility - legitimised through transparency and public accountability for the achievement of the Government's inflation target.
Christian Noyer: G20 roadmap – how finance can help rebalance the world economy Introductory speech by Mr Christian Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the Bank for International Settlements, at the Paris Europlace Financial Forum, Paris, 6 July 2010. *  *  *  Before I start let me thank the organizers for inviting me to this conference: they have managed to put together an outstanding program and it is a great pleasure for me to exchange views with the other participants in this round table. I was asked to introduce the discussion on “G20 Roadmap: How Finance Can Help Rebalance the World Economy”. The title of this session contains some of the most important concepts on the current policy agenda: “finance”, “rebalancing the world economy” and “the G20 Roadmap”. Let me take them in turn. “Finance”, first. Since 2008, the world is going through the deepest financial crisis since the second World War, and hence never before has the word finance been so crucial in the policy agenda. This financial crisis has had very high real costs: real output, industrial production, trade flows, to name just a few key variables, have contracted markedly during the crisis. In addition, the fiscal positions and the public debt of many countries have also deteriorated markedly in the past two years. Yet, it is important to recall that these real and fiscal problems largely stem from the financial issues that plagued our economies in the past decade.