3 Figure 2 shows that the flexprice gap occasionally differs somewhat from the GDP gap. The fluctuations in the flexprice gap have in general been slightly less, which is partly because the flexprice gap only captures the fluctuations in GDP that can be explained by sticky prices and wages. However, the flexprice gap and the GDP gap do provide a uniform picture of the recent development towards an excessively low level of resource utilisation in the economy. The fact that the flexprice gap is now negative is currently interpreted to mean that output is now lower than it would have been if prices and wages had adjusted to the changes that have recently affected the economy. Labour market gaps Another type of measure focuses on utilisation of labour. These are based on Statistics Sweden’s labour force surveys and on the National Accounts. Figure 3 shows two such measures: unemployment and the employment rate, that is, what percentage of the population of working age is employed. The curves provide a consistent picture of changes in resource utilisation over time. At the same time, they show that the crisis of the 1990s permanently raised unemployment and reduced the employment rate. This makes it difficult to determine what is a long-term sustainable level for resource utilisation in the labour market. From the perspective of general politics, it is normally regarded as an advantage if employment is high and unemployment is low.

Similarly, the development of the domestic financial system particularly the domestic financial markets, the strengthening of the surveillance system and the legal, regulatory and supervisory frameworks, have increased the capacity and capability to manage consequences on access to cross border financing, and from quantitative easing, deleveraging activities, and financial sector resolution in the major economies. In addition,  2  BIS central bankers’ speeches  this has been reinforced by the building of buffers during the good times. Financial intermediaries remain well capitalised with strong buffers, while the international reserves remain sufficient to deal with surges and reversals in capital flows. A more recent development in this decade is greater regional collaboration and cooperation. Asia is well ahead in the areas of surveillance arrangements, financial safety nets, and crisis management. These frameworks and arrangements have been built up during the good times. Information sharing and the establishment of regional arrangements and platforms, including the building of regional financial infrastructures and markets, are not only to facilitate the efficient intermediation of financial resources, but also to safeguard financial stability in the region. This trend paves the way for coordinated policy actions to manage and mitigate the risks and vulnerabilities to the region. Conclusion The global economic and financial environment remains highly dynamic and uncertain. While emerging Asia is unmistakably contributing to reshaping the configuration of the global economy and the international financial system, the fundamental underlying factors driving this global transformation needs to be continually reinforced. It will require our own continuous economic and financial transformation.