and growing fiscal deficits. many observers feared an abrupt unwinding of these deficits, leading to a disorderly adjustment in global financial markets. 3 the adjustment started with the collapse of lehman brothers. some of the internal and external imbalances in the us economy that were at the origin of the crisis have now begun to correct. the real estate market has gone through a major adjustment, declining by 30 % compared to its pre - crisis peak ; excessive leverage of households and financial firms has been reduced ; and the us current account deficit has roughly halved relative to pre - crisis levels, to about 3 % of gdp. the adjustment will only remain durable, however, if efforts to complete the necessary reforms continue. these include continuing financial sector and regulatory reform ; designing a credible strategy for medium - term fiscal consolidation to ensure the sustainability of public see “ the great moderation ”, remarks by federal reserve chairman ben bernanke at the meetings of the eastern economic association, washington dc, 20 february 2004. see rogoff, k., “ the second great contraction ”, project syndicate, 2 august 2011. see, for example, obstfeld, m. and rogoff, k., “ global current account imbalances and exchange rate adjustments ”, brookings papers on economic activity, 1 : 2005, pp. 67 – 123. bis central bankers ’ speeches finances ; and pursuing structural reforms to help strengthen the competitiveness of the export sector. consider now the situation on this side of the atlantic. the euro area as a whole was not imbalanced prior to the crisis, nor is it so even today. the current account of the euro area has been roughly balanced since the start of economic and monetary union in 1999. on average, the general government primary budget of euro area member states will be almost in balance this year, and will record a small surplus next year, according to the imf. however, this has masked significant intra - euro area imbalances in terms of current account positions, competitiveness and public finances. for instance, the real effective exchange rates of greece, ireland, italy, portugal and spain had appreciated on average by 16 % relative to that of germany between 1999 and 2008, whereas the real effective exchange rate of the euro appreciated by only 3 % over the same period. a significant process of rebalancing is now under way in europe, particularly in the euro area. after several years of artificial calm in global financial markets and the

central bankers ’ speeches sixth, learning machines. this might well be the most impactful technological change of the future – computers that can think. • traditional computing machines and algorithms are programmed to carry out specific tasks in response to defined circumstances according to the software programme that is written into them. • we are now moving into the age of cognitive machines which are designed to learn from the data that they hold and be able to, in a sense, programme themselves to perform new tasks. • they continuously adapt to new data as well as feedback and inputs gathered from their experiences, including interactions with humans. we are already beginning to see examples in the financial industry : • in equity, commodity, and fx markets, some traders are using self - learning algorithms – • they not only analyse historical data, predict price movements and make trading decisions, but continually upgrade and adjust their trading strategies in the light of new evidence and market reactions. in lending, learning machines have been used to construct models for consumer credit risk and improve the prediction of loan defaults. the legal minds assembled here might want to reflect on where the legal liabilities arising from the actions – or inactions - of such learning machines lie. the six technologies that i have outlined have the potential to transform the financial industry globally. there could well be others that i have not mentioned. the important thing for our fis is to be alert to these and other technology trends, understand their possible implications, and seize the opportunity to apply relevant technologies safely and efficiently - to boost productivity, gain competitive advantage, and serve consumers better. smart nation needs a smart financial centre at the national level, singapore has set its sights on becoming a smart nation – one that embraces innovation and harnesses info - comm technology to increase productivity and improve the welfare of singaporeans. the smart nation programme under the prime minister ’ s office has brought together stakeholders from the government and the industry to identify issues and develop solutions with this objective in mind. government agencies have been rolling out a steady pipeline of smart nation initiatives. • the housing development board has trialled a new system that utilises home sensors to monitor elderly folks who are staying alone and alert caregivers should an emergency arise. • the land transport authority is studying the use of autonomous vehicles that can self - drive with the help of environmental sensors and navigation systems. • the urban redevelopment authority has been utilising geospatial information and data analytics for urban design and land - use planning. a smart nation needs