In contrast to the stagnant consumer, business spending on inventory accumulation and fixed capital together contributed 2½ percentage points to GDP growth last year. The contribution from stockbuilding cannot be expected to persist and indeed has already waned somewhat. As far as capital spending goes, on the one hand, there seems little rationale for businesses to expand capacity while activity is weak and there is still a margin of spare capacity. On the other hand, business investment is still about 20% lower than its pre-crisis peak (Chart 3). Some of that shortfall reflects replacement investment postponed during the recession, which is likely to be re-instated at some juncture. Moreover, even though overall demand may remain depressed, the rebalancing in activity towards the internationally tradable sectors of the economy will probably necessitate some expansion in capacity in those sectors, while achieving cost savings and efficiency gains also often requires investment. Finally, many large companies are presently cash-rich and can access the capital markets. So a shortage of finance should not prevent them increasing their investment spend, though some smaller businesses relying on bank credit may have more trouble. But, overall, it seems reasonable to expect further recovery in business investment. Given the past substantial depreciation of sterling and the associated improvement in the competitive position of UK suppliers, the performance of net exports has so far been somewhat disappointing. That is less to do with exports, which grew by more than 5% in 2010, reflecting both strong global growth and improved competitiveness.

Rodrigo Vergara: The role of macroprudential policy and monetary policy in safeguarding financial stability Speech by Mr Rodrigo Vergara, Governor of the Central Bank of Chile, at the First Conference “Banking Development, Stability and Sustainability”, organised by the Chilean Superintendency of Banks and Financial Institutions and the Diego Portales University, Santiago, 5 November 2015. *  *  *  I thank Claudio Raddatz y Rodrigo Cifuentes for helping me in the preparation of this note. Good Morning. Before I get to the substance, I want to thank the Superintendency of Banks and Financial Institutions, in particular the Superintendent, Eric Parrado, for inviting me to this conference. On this occasion, I will focus my discussion on macroprudential and monetary policies and their role in safeguarding financial stability. I think that it is from this perspective that I can, as a representative of the Central Bank of Chile, offer a different and complementary view from that of the various representatives of the supervisory institutions gathered here today. I will begin with a brief review of the definition of macroprudential policies and how these policies differ from monetary policy. Then I will discuss the tools and their effectiveness, plus some ongoing debates, particularly about the convenience of using monetary policy for macroprudential purposes, and the institutional organization of the macroprudential objective. Last but not least, I will touch on the Chilean experience with these policies. 1. What is a macroprudential policy?