THE chairman of the US Federal Reserve bank Mr Alan Greenspan yesterday warned western countries not to be complacent over success in reducing inflation, in a speech in Louvain, Belgium.

Warning of the dangers of allowing "memories of stagflation in the 1970s" to fade, he said that "impressive success must not make us complacent".

Mr Greenspan was attending a ceremony at which he received an honorary university degree for services to world banking and economics.

Several factors had caused inflation to fall, he said. Western countries had taken many steps to deregulate markets and increase competition and these measures had also affected the labour and financial markets. Meanwhile, emerging economies in South America and in Asia had become big markets and centres of production.

Mr Greenspan also underlined the responsibility of the United States in the international financial system.

"Countries whose currencies are widely used internationally, like the United States, have a special responsibility to provide an anchor of stability for themselves and the world at large."