They facilitate the allocation of resources and their deployment within a financial system by reducing risk and transaction costs. By facilitating market exchange of complex financial services they can be taken as a means to achieve efficiency gains within a financial system. Various mechanisms are provided to clear and settle securities transactions. Common features of these mechanisms are, e.g., that they provide for a technical infrastructure to exchange payment and settlement instructions and that they rely on commonly agreed rules and processes. There is widespread agreement that these mechanisms have been fairly successful in reducing settlement risks and transaction costs. With respect to the business activities of market utilities I can mention, e.g., the dematerialization and immobilisation of securities or the increasingly pervasive application of the delivery-versus-payment principle. In essence the clearing and settlement function provided in a financial system contributes to the reduction of imperfections and thereby makes possible increasingly more integrated and efficient  BIS Review 28/2003  1  economic systems. This improvement, in turn, facilitates capital accumulation and technological innovation that underlie the implementation of investment projects. Thereby a long-term economic growth process is supported and, correspondingly, welfare is improved. Let me state the obvious with Levine (1997): “the development of financial markets and institutions is a critical and inextricable part of the growth process […]”. However, despite the tremendous efficiency gains obtained through the emergence of the financial system, the improvement process is far from being over.

At the start of my testimony, I stressed that the key objective of economic policy at the current stage of the crisis must be to ensure the most favourable conditions possible for when the economy emerges from lockdown. However, more persistent adverse effects on certain sectors after the pandemic has been brought under control cannot be ruled out, although it is undoubtedly too early to anticipate how extensive they will be, or which activities will bear the brunt of the impact. Further, certain tentative indications suggest that, in the long term, demand could fall in some sectors, such as retail trade, and increase in others, such as logistics, technology, and IT systems. In view of this possibility, it would seem advisable to make the relevant preparations through arrangements to ease cross-sectoral and cross-company reallocation and to strengthen the lifelong learning of workers, especially considering that a priori the cross-sector transferability of knowledge between potential losers and potential winners does not appear to be particularly feasible.12  11  For illustrative purposes, if, as a result of implementing structural reforms, potential growth were to rise by 0.5 pp per annum, the debt ratio under the previous simulation would be 6 pp lower in 2030. 12 B. Anghel, A. Lacuesta and A. V. Regil (2020), “Transferibilidad de habilidades de los trabajadores en los sectores potencialmente afectados tras el Covid-19”, Artículos Analíticos, Banco de España, forthcoming.