dynamics may well provide solutions to problems that would otherwise be difficult to solve. however, the conditions must be created for these forces to play out in full. greater financial integration would make the euro area more attractive to investors, both foreign and domestic. the european economy has been running a balance - of - payments surplus for years. therefore, it has been generating savings that exceed domestic investment, partly redirecting them abroad. prior to the pandemic, domestic financial resources invested outside of the euro area averaged over €300 billion per year, or almost 3 per cent of gdp. had they been directed towards domestic business initiatives, capital investment on our continent would have increased by one fifth. a single capital market would improve the allocation of savings. it would also boost cross - border financial flows between member states, providing european households, firms and financial intermediaries with better diversification opportunities. this would allow them to mitigate the impact of local shocks and to take part in projects with higher risks and returns. the financial sector currently enables european investors to absorb just one fourth of local gdp shocks, compared with three fourths in the united states. to make progress towards a single capital market in europe, two fundamental problems must be addressed. the first is the lack of a european safe asset. a common safe asset is essential for the functioning of any developed capital market. the possibility of trading a risk - free benchmark would facilitate the pricing of financial products such as corporate bonds and derivatives, thereby encouraging their development. furthermore, it would provide a form of collateral that could be used across countries and market segments, facilitating collateralized trading in interbank markets and allowing better risk diversification by financial intermediaries. a safe asset would also attract foreign investment, thereby strengthening the international role of the euro. e. letta, much more than a market : speed, security, solidarity. empowering the single market to deliver a sustainable future and prosperity for all eu citizens, april 2024. the second problem is the lack of a complete banking union, which restricts european banks to operating mainly in national markets. establishing the single supervisory mechanism and the single resolution mechanism was a major step forward, but it fell short of creating a fully integrated european banking market. 20 a sequential, small - steps approach was taken, which has not worked. 21 banks play a crucial role in the major capital markets : from asset management to bond and equity underwriting and placement, and from initial public offerings to financial advisory and market

few signs that the pandemic will lead to more permanent changes in global trade. despite some disruptions in global supply chains and goods transport, trade in goods has held up well. following a temporary decline, trade picked up through 2020. travel and tourism are among the industries profoundly affected by the pandemic. much of the tourist traffic is likely to rebound once we can cross borders freely again, but many have discovered this past year that online meetings are also an effective alternative. this may result in less travel activity than before. environmental considerations suggest the same. during the pandemic, national governments have had to focus primarily on giving their own population the best possible protection against serious health consequences. at the same time, this past year has clearly demonstrated the importance of crosscultural and cross - border cooperation. thanks to an extensive international research effort, effective vaccines could be quickly rolled out. let ’ s hope that it is this experience that we carry forward. in the long run, all countries benefit from open borders, common standards and international cooperation. a more active fiscal policy abroad norges bank during the pandemic, economic support measures have been massive. while both monetary policy and fiscal policy action was quickly taken, fiscal policy took the lead ( chart 6 ). this was the case everywhere the pandemic has raged, not only in norway. economic perspectives 18 february 2021 chart 6 forceful fiscal policy response increased spending and reduced taxes. as a percentage of gdp ay or n m er g w an ce an ly fr ita di in na hi c pa il ja az br u u y a n k s sources : imf and norges bank the lockdown this past spring was sudden and brutal and its impact on businesses varied widely. fiscal policy measures have targeted the industries hardest hit by containment measures. the objective has been the same : persons who were out of a job had to be secured financially. unnecessary job losses had to be avoided. monetary policy has underpinned fiscal policy measures. policy rates were reduced where possible. moreover, unconventional monetary policy, such as asset purchases, was stretched even further. central banks have also effectively performed the tasks assigned to them for ensuring well - functioning capital markets. extensive central bank measures prevented problems in the financial system from amplifying the global downturn. norges bank chart 7 very low interest rates three - month money market rates. trading partners1 ). percent economic perspectives 18 february 2021 1 ) weighted average of money market interest rates for