For several years, the UK banking sector has been relying extensively on external capital flows, principally shortterm wholesale funding, to finance its lending activities. Those external inflows have fallen sharply – a mild form of the reversal of capital inflows experienced by a number of emerging market economies in the 1990s. Unless they are replaced by other forms of external finance, the adjustments in the trade deficit and exchange rate will need to be larger and faster than would otherwise have occurred, implying a larger rise in domestic saving and weaker domestic spending in the short run.
Speech by
MERVYN KING
GOVERNOR OF THE BANK OF ENGLAND
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment