are scaling up our monitoring and analysis of domestically - relevant non - bank financial sector. finally, in view of its central role in determining our effectiveness, it should come as no surprise that resilience has been selected as one the five priority themes shaping our 2019 – 2021 strategic plan. iv. fiscal resilience fiscal resilience exists if the public finances are sufficiently sound to enable policymakers to buffer adverse shocks through the operation of the automatic stabilisers and the activation of proportionate discretionary fiscal measures. in contrast, fiscal fragility amplifies adverse shocks through damaging feedback dynamics by which increases in the sovereign risk premium raise economy - wide funding costs and, in extremis, lead to a loss of market access. the anchor of a resilient fiscal regime is a robust public balance sheet, in combination with a cyclically - appropriate time path for the budget balance. i have discussed the political economy challenges of implementing a prudentially - focused fiscal strategy elsewhere ( lane 1998, 1999, 2013, 2018b ; tornell and lane 1999 ). rather, i want to focus on some specific issues relating to the current irish situation. in particular, one current byproduct of ireland ’ s status as an export platform for multinational firms is that there has been a surge in corporation tax revenues in recent years. a substantial proportion of the extra revenue relates to the external profits of domestically - resident multinational firms. in addition, the public finances have also been boosted by the low interest rate environment, especially in view of the high level of sovereign debt ( which is owed to foreign investors to a large degree ). analytically, the combination of extra corporation tax revenues generated by the overseas activities of multinational firms and lower interest payments to foreign investors can be interpreted as equivalent to a positive inward income transfer. in terms of the cross - country experience, other types of inward transfers include the foreign earnings of commodity producers, net recipients of eu transfers and recipients of official aid. the analysis of such inward transfers has given rise to an extensive research literature. a basic lesson is that temporary windfall income should be treated differently to permanent income, due to the welfare gains from smoothing consumption and the long - term impact of temporary spending surges that may permanently damage the productivity of the tradable sector. ( the latter phenomenon is known as the “ dutch disease ”. ) it follows that temporary windfall income should be largely saved, through some mix of accumulating foreign assets and ( subject

equity investment, but now a considerable portion of capital inflows is invested in local currency - denominated longerterm bonds – this change has made foreign capital flows much more stable. on the other hand, the development of fixed income markets in the region has also brought new difficulties. first, as foreign investors hold a greater share of bonds in the region, bond yields are greatly affected not only by domestic economic developments or monetary policy, but also by global economic conditions. in addition, there are increased concerns about financial and foreign exchange market unrest in the event of a sudden reversal of capital inflows to the regional bond markets. there have recently been dramatic changes in global economic environment, including the continuing monetary policy normalization by the u. s. federal reserve and the rising trade tensions between the u. s. and china. in fact, some emerging market economies with weaker fundamentals have experienced large - scale capital outflows, resulting in more volatile stock prices, exchange rates and interest rates. so far, we have seen that the development of the fixed income market in the asia - pacific region has greatly contributed to better market functioning and a better policy environment, while 1 / 2 bis central bankers'speeches creating no small difficulties. against this backdrop, allow me to suggest some policy tasks that countries in the region must first pursue to enhance financial and economic stability. to begin with, we must enhance the overall resilience of the regional economy so that sudden changes in capital flows triggered by external shocks do not lead to systemic risk. to this end, we must reinforce our capacities and policy space to properly respond to external risks. this may be done by improving current account balances, holding sufficient foreign reserves, and enhancing exchange rate flexibility. next, we must continue our international cooperation to reinforce financial safety nets. asiapacific countries have striven to establish regional financial safety nets and develop fixed income markets through the chiang mai initiative multilateralization ( cmim ), the asian bond markets initiative ( abmi ), and the asian bond fund ( abf ). we also need to continuously expand our cooperation not only within the region but also with international organizations such as the imf and bis to strengthen global financial safety nets. last but not least, we have to continue our policy efforts to strengthen fixed income market infrastructure and functioning, such as by seeking diverse investors, making corporate bond markets more vibrant, and improving the processes for bond issuance and trading. i believe that these efforts would expand both