In a similar vein, the sharp deterioration of the fiscal positions of many governments has also led to a re-assessment of sovereign risks. About 10 years ago, investors were concerned that the strong budget surplus of the US Federal Government might lead to a severe reduction in the supply of US Treasuries. Today, bond vigilantes are focusing attention on not just the short term fiscal health of governments, but on the impact of demographic changes, large entitlement benefits and unfunded pension liabilities on the longer-term fiscal health of these governments. 7. My third observation is the speed of structural changes in emerging economies and transformation in the patterns of global trade and investment. As these are superimposed on cyclical changes, it is often difficult to disentangle the two. Emerging markets, especially Asia, have weathered the crisis relatively well, and recovered quickly. This year, the IMF expects emerging Asia to grow by nearly 7%, almost double the rate forecast for the global economy as a whole. Many analysts expect the differential in growth rate to persist in the coming decade. The global economy went through stagflation in the 1970s, disinflation in the 1980s, and a roaring decade in the 1990s. In 2000s, we had the dotcom bubble, and a severe financial crisis. How the coming decade will turn out, especially for emerging economies, will change many of the risks and return assumptions on a wide range of asset classes. Dealing with the implications 8.

The key actions so far include: Regular meetings of the FSAC to assist in developing common policies, better coordination and exchange of information with a view to maintaining stability and further developing the financial markets; Launching a new department within the Central Bank with operational tasks and responsibilities in the area of bank resolution; Collection of the first contributions from the banks into the BRF, which will amount to nearly 1/2  BIS central bankers' speeches  BGN 300 million, including the upcoming 2017 installments; Approving the resolution plans for the foreign subsidiaries belonging to banking groups operating in Bulgaria. We have already planned the next steps, which will further build on recent progress. Our efforts are focused on the following groups of measures: Expanding the FSAC mandate, including for better coordination of agencies’ contingency planning in response to situations threatening financial stability; Creating capacity for the practical application of resolution tools, more specifically the sale of business, the bridge institution and the bail-in tools, if needed; Prioritising the resolution planning for domestic systemically important banks; this process is presently underway but their resolution plans are not yet adopted; Addressing financial and legal restrictions on liquidity support by the central bank, taking into consideration both the existing currency board regime and the EU state-aid rules and procedures for public support to banks. We plan to apply the above measures along with further strengthening banking supervision, reducing bank nonperforming loans (NPLs), and further developing the overall financial sector safety net.