maintaining a business climate which is conducive to enterprise and innovation. flexible labour markets are also a key ingredient in ensuring that a high level of employment can be sustained against the background of structural change and increasing global competition. see asian development bank ( 2011 ). note that the adb analysis covers a much wider group of economies than charts 2 and 3, which boosts the share of world population to over 50 %. llewellyn and santovetti also provide a similar analysis of future economic prospects in asia. bis central bankers ’ speeches pressure on energy and commodity markets there are two other wider challenges raised by the changes we have seen in the global economy in recent decades. the first is the pressure that strong growth in asia and other rapidly growing emerging market economies is placing on the markets for energy and other natural resources. we have already seen this pressure reflected in a strong upward move in global energy and commodity prices since the early 2000s, as chart 5 shows. after a brief respite during the financial crisis, this upward pressure on energy and commodity prices has resumed as the world economy has bounced back from recession. the oil price is back above $ 100 / barrel, and while there has been a modest correction in commodity prices over the past month, this seems likely to be a short - term pause in the upward trend rather than a fundamental readjustment. chart 5 – real oil and commodity prices since 1980 deflated by us consumer price index ; 2000 = 100 s & p gsci agriculture and livestock index s & p gsci industrial metals index brent crude spot price. source : imf and thompson datastream it is no coincidence that this upward pressure began to emerge in the early 2000s and has continued for the best part of a decade now. the rapid growth we have seen in asia and other emerging market and developing economies has been very resource - hungry. the effects of this can be seen in the pattern of global energy consumption, shown in chart 6. until the early 2000s, energy consumption in the advanced oecd economies and in the non - oecd developing and emerging market economies rose at a similar rate, with the oecd economies accounting for the majority of demand. in the wake of the strong growth in the 2000s, this position has been reversed with the non - oecd now the dominant contributor to world energy demand. for example, china ’ s share of global oil consumption has risen from 6 % to 11 % in the past decade alone. 4 international monetary

counterparty default. given that since the global financial crisis the balance of direct risk - taking in specific products has shifted away from investment banks to their clients, counterparty risk is greater than ever before. today, the bigger risk to investment banks is not from their proprietary positions, but from the aggregate exposures of their clients. clearly losses from counterparty risk are not new. during the global financial crisis losses from counterparty defaults totalled over $ 50bn. but these losses were overshadowed by banks ’ own losses of nearly $ 200bn from principal positions. the global financial crisis however taught us that it was concentrations that present a great danger in firms ’ counterparty risks. 70 % of counterparty losses in the crisis came from similar uncollateralised cds exposures to a small number of monoline insurers. these risk concentrations were not well managed or controlled. unfortunately we have again seen banks ’ counterparty risk concentrations not appropriately identified or controlled. it is disappointing that lessons from the crisis on counterparty risk management were not properly learned. as we set out in our dear ceo letter last year, archegos is a prime example of this – a single client of many firms had built up risk concentrations that proved to be outsized. some banks also got caught by this in the nickel market more recently. in other cases, we have seen groups of clients with similar risk exposures, whether that be large concentrated positions of their own or trades with banks that held such positions, which proved difficult to exit as market conditions and liquidity dynamics changed. risk concentration should not only be assessed on a client by client basis, but across all clients combined. and most importantly, across the client ’ s market - wide portfolio, not just the portion held with a single firm itself. whilst this information may not be readily available, the onus is on firms to demand of their clients the information they need to assess the risks they are exposed to. we also see some firms not adequately assessing the liquidity position of their counterparties. look at the “ dash for cash ” in march 2020 or recent issues in the commodities markets. whilst counterparties may be fully hedged against capital losses from sharp moves in asset prices, some have found difficulty in monetising their assets in order to meet margin calls. firms ’ management and boards should ensure that in credit assessments equal focus is placed on the liquidity profile of their clients as on their capital strength. right - way risk is only right - way