Commentary on ‘‘Monetary policy today: sixteen questions and about twelve answers’’

Lucas Papademos (Λουκάς Παπαδήμος)

Let me start by saying a few words of thanks and extending my best wish-es to this great institution, which is celebrating 150 years of bearing theprestigious name of Banco de España. I would like to thank Governor Caruana and the Banco de España for organising this excellent conference and for inviting me to participate in this panel. To kick off this conference, Alan Blinder has prepared an impressive survey  which presents and assesses the main critical issues that are currently truly rele-     vant for monetary policy-makers. He has demonstrated again an admirable ability  to blend top academic research with good central banking practice and common      sense to produce this insightful and stimulating review. Alan’s list of 16 questions      regarding monetary policy is fairly long and, indeed, somewhat longer than the   list he presented in 1999 at the first ECB conference. This may seem discour-     aging and might suggest that not much progress has been made over the past  six years. However, the two lists are not identical: some of the original questions      have been resolved, and new ones have arisen. Therefore, there are still plenty of  critical issues concerning the science and art of central banking that need to be   addressed, and Alan himself provides answers to most of them.
Given the wide range of questions raised by Alan, I will inevitably have to be  selective and do some cherry-picking, by focusing on issues that are more con troversial or more interesting from my perspective, and that can also be discussed   adequately in the limited time available. I will discuss a number of issues regard ing the objectives and strategy of monetary policy, aspects of policy implementation including central bank communication and transparency, the relationship between monetary policy and financial markets, and the implications of globalisation for monetary policy. free ebook