activity indicators have been weak. an escalation in trade tensions could lower chinese gdp growth by up to 1. 5 percentage points6 over a two year horizon. the slowdown could also encourage authorities to stimulate the economy, leading to increases in already high levels of corporate debt ( 155 % of gdp compared with 106 % in the euro area ) 7 and in the risks to financial stability. our second challenge is impatience. thirty years ago, independence was conceived as a response to the temptation to make trade - offs between growth and price stability. but the real temptation, which is even stronger today, is to trade off long - term interests in favour of the short term. financial markets are frequently characterised by short - termism and bouts of extreme volatility. but, more importantly, there is a political pressure towards it, driven by populist impatience that would like to have a lot, right away. for a number of years this impatience has been hindering long - term efforts in the form of fiscal consolidation and structural reforms, and these have unfortunately slowed in g20 countries. when we compare the performances of our different european member states, it is clear that debt and public spending are not the engines of growth. there is a need today for fiscal stimulus in those countries that have surpluses, and for structural reforms across the board : without this there can be no sustainable growth. on this issue, i would just like to say a word on france, which has stood out as a positive exception over the past two years : the gilets jaunes ( yellow vest ) crisis provided justification for an emergency “ package ” to bolster purchasing power ; but i do not think it should or even could halt the transformation efforts already underway. lastly, and this is our third challenge, isolationism, characterised by the escalation of trade tensions, constitutes the biggest short - term threat to global growth. even before the tariff hikes, the uncertainty caused by protectionist stances, essentially on the part of the united states, already appears to be threatening growth via its impact on business investment. more broadly, uncooperative economic strategies – including within europe – are on the rise. if each country 3 / 6 bis central bankers'speeches seeks only to protect its own national interests, then everyone risks losing out – a phenomenon economists call “ the prisoner ’ s dilemma ”. according to a banque de france study, a more collective fiscal and structural strategy could have boosted euro area gdp growth by between

system does not fall below a certain level. second, the bcbs has recently see eba, third interim report on the consistency of risk - weighted assets, 2013. see basel committee, regulatory consistency of risk - weighted assets in the banking book, july 2013. behn, m., haselmann, r. and v. vig, ( 2014 ), “ the limits of model - based regulation ”, safe working paper series, no. 75. bis central bankers ’ speeches established the high - level task force on simplicity and comparability mandated to undertake a strategic review of the capital framework in order to reduce reliance on models for some risks and portfolios. i expect both strands of work not only to improve the resilience of financial institutions but also to have a positive impact on lending to the real economy. empirical evidence on the behaviour of german banks during the crisis suggests that loans subject to internal model capital charges were reduced significantly more than loans under the standardised approach to capital regulation, supporting the view that internal models are relatively more pro - cyclical than the standardised approach. 29 the cited paper shows that, for the german banking system, loans subject to model - based, time - varying capital charges were reduced by 3. 5 percent more than loans under the traditional approach to capital regulation, during the financial crisis. hence, increasing the relative importance of the standardised approach should help to smooth the credit cycle, in particular by making deleveraging episodes less severe. securitisation another important strand of work, strongly pushed by the ecb in collaboration with the bank of england, is the revitalisation of the securitisation market. when performed with proper regard to loan underwriting standards, securitisation can play a very important role in diversifying bank funding sources, freeing bank capital and allocating risk more efficiently within the eu financial system. this is particularly important in the current stage of bank balance sheet deleveraging when other funding sources must replace shrinking traditional banks. for securitisation to work in stimulating lending to the real economy, we need it to be simple and transparent. this would reduce the post - crisis stigma associated with securitised products and would improve non - bank investors ’ confidence in securitisations leading to higher demand. in turn this would free - up bank capital and allow banks to expand their own lending to the real economy. capital markets union finally, let me briefly touch upon a very recent initiative in europe