On a deeper level, this conclusion is based on the recognition that, from a welfare perspective, a “leaning against the wind” policy would clearly be dominated, by instruments which target the root causes of those problems generated by excessive risk-taking in times of low interest rates. BIS central bankers’ speeches  7  8  BIS central bankers’ speeches  BIS central bankers’ speeches  9  10  BIS central bankers’ speeches  BIS central bankers’ speeches  11  References Altunbas, Yener, Leonardo Gambacorta and David Marqués-Ibáñez. 2010. Does monetary policy affect risk-taking. European Central Bank Working Paper, No. 1166, 11 March 2010. Angeloni, Ignazio, Ester Faia and Marco Lo Duca. Monetary policy and risk-taking. 2010. Bruegel Working Paper 2010/00, February 2010. Assenmacher-Wesche, Katrin and Stefan Gerlach. 2010. Monetary policy and financial imbalances: facts and fiction. Economic Policy, Volume 25, Issue 63, Pages 437–482, July 2010. Bean, Charles, Matthias Paustian, Adrian Penalver and Tim Taylor. 2010. Monetary policy after the fall. Paper presented by Mr. Charles Bean, Deputy Governor of the Bank of England at the Federal Reserve Bank of Kansas City Annual Conference, Jackson Hole, Wyoming, 28 August 2010. Bean, Charles. 2006. Impact of globalisation on monetary policy: commentary. Proceedings. Federal Reserve Bank of Kansas City. pp. 307–313. Bernanke, Ben. S. 2010. Monetary policy and the housing bubble. Speech at the Annual Meeting of the American Economic Association, Atlanta, Georgia. 3 January 2010. Borio, Claudio. 2011. Anchoring countercyclical buffers: the role of credit aggregates. Bank for International Settlement Working Paper, No.

The Maltese taxpayer is still paying the price of past mistakes in this respect. On the other hand, the private sector must do its utmost to become more competitive without relying on subsidies, protection or unsustainable monopolistic positions. In the past, business used to agglomerate around what were perceived to be the safest and most profitable propositions, such as real estate development and importation. These activities have, unfortunately, also proved to be less productive than others. A fresh, export-oriented approach based on investment, innovation and higher value added is necessary for survival in today’s competitive global environment. This ties in very closely with the third factor involved in sustaining competitiveness, namely the need to increase the amount of resources in the economy and the productivity with which they are used. Productivity growth is perhaps the single most important objective for it determines how fast the economy can grow. And faster growth not only lifts living standards, but it also boosts tax revenues and makes it easier to do many socially desirable things, such as paying for tomorrow’s pensions. Turning first our attention to the labour market, human capital is the most valuable resource this country possesses. We must nurture it and use it as productively as possible. Towards this end, our labour supply and our work practices must be flexible enough to rapidly adapt to changing market needs. Training and development must be an on-going process, especially in the skills that are most in demand.