The global economy: so far so good?

Speech by Malcolm D Knight, General Manager of the BIS, at the Belgian Financial Forum in Brussels, 8 July 2005.

Mr Knight analyses recent global macroeconomic trends. He discusses the driving forces of the recent economic expansion and their impact on households, corporations and financial institutions. He then explores issues arising from these developments for economic policy. Restoring the medium term fiscal balance, allowing greater exchange rate flexibility in Asia are major challenges. The long period of very low interest rates may lead to new, undetected vulnerabilities in the financial system. Central banks need to remain alert despite the benign inflationary environment.