Good evening.
It is a pleasure for me to be in London today, particularly at the invitation of the Society of Professional Economists. London evokes a lot of things for French people. French economists appreciate the concentration of excellent economic research in London – tonight's list of attendees is particularly impressive in this respect. But for French citizens, London also conjures up an important page in our history: we have not forgotten that during World War II London hosted the government in exile of the General de Gaulle and the Free French. It may be a surprise that I evoke this now, as central bankers typically speak about recent economic developments. But today I would like to consider a longer perspective, and focus on a key aspect of our current environment: conflicts.
In retrospect, the Great Moderation, which started soon after the Fall of the Berlin Wall, was a period of peace, rapid economic development and globalisation, stability, and relative political consensus. Economists were not the only ones to be lulled into thinking that this might be a permanent new steady-state, be it the "End of History"i or more modestly the end of economic crises and inflation. Although the situation had already deteriorated somewhat in the previous decade, in just a few years there has been a dramatic worsening due to worldwide tensions and fragmentation, and increasing political conflicts within our countries or groups of countries. What are the implications of this for central bankers? I will first try to describe the "almost indescribable": the nature of these shocks and their economic consequences, and then turn to how I think central banks should travel through this new and troubled landscape.
