I would like therefore to consider two issues here: •  Firstly, experience suggests that financial cycles may have recently tended to amplify relative to business cycles; what are the driving factors behind this move;  BIS Review 41/2001  1  •  Secondly, what are the possible policy implications of this development, from both a monetary and financial stability perspective. 1. Experience suggests that financial cycles have recently tended to amplify relative to business cycles. A. What are the major features of these amplified financial cycles? Let us first consider credit cycles. There is no doubt that the amplitude of credit cycles is usually larger than that of business cycles. What is however noticeable here is that, over the last three decades, business cycles have been less frequent and less amplified while credit cycles have tended to remain fairly marked. Thus credit cycles have been amplifying in relative terms compared with business cycles. Asset price cycles have also become more pronounced even if the fixed interest rate markets have a tendency to be somewhat contra-cyclical. •  In the last two decades market forces have indeed tended to cause clear misalignments between equilibrium and actual asset prices. Stock markets in particular have experienced this phenomenon. But in foreign exchange markets as well, prices have also tended to diverge substantially from their “equilibrium level”, although those divergences have been contained through fruitful GVII cooperation during the last 15 years. •  In addition, some markets have seen an increase in volatility and frequent volatility peaks.

Dimitar Radev: Addressing underlying issues of cross-border investment in the EU Publication by Mr Dimitar Radev, Governor of the Bulgarian National Bank, in "Views The EUROFI Magazine". The magazine were disseminated during The Eurofi High Level Seminar 2017 before ECOFIN, Malta, 5-7 April 2017. * * * We are witnessing a downward shift in cross-border investment in the EU, while the EU current account moved to positive territory in recent years. The savings-investment mismatches, therefore, are at the heart of the conundrum we face in developing the cross-border investment in the EU. Several initiatives to address this issue have been launched, including the Investment Plan for Europe, and the European Long-term Investment Fund. A large-scale new initiative is the establishment of the Capital Markets Union intended to further enhance the mobilization of capital and its channeling to companies and infrastructure projects offering new opportunities for savers and investors across the EU. A few other initiatives are under consideration, including the creation of a European Savings Investment Fund. However, the results of all initiatives have been mixed so far, and cross-border investment is stagnating. Before moving forward we need to better understand the underlying factors behind recent developments. The current initiatives look technically sound, but the lack of sufficient progress in their implementation reveals a number of remaining underlying issues. These include: (i) the unfinished agenda with regard to banking and financial integration; (ii) slow progress in real convergence; and (iii) limited availability of adequate infrastructure and innovation projects.