. this is particularly important in the context of ireland ’ s vulnerability as a small, open, economy, and the risks of which i referred to earlier. we have also taken forward - looking macro prudential actions, which include : the banking crisis – a decade on the activation of the counter - cyclical capital buffer, which is designed to build resilience during times of growth, and so that it can be released during a downturn, avoiding the procyclical withdrawal of credit supply ; the introduction of borrower - based measures that limit loan - to - value and loan - to - income ratios, which increase the resilience in the system and reduce the risk credit - fuelled property bubbles from over - borrowing and over - lending ; and advice to government regarding the need for running budget surpluses as a precondition for the running of stabilising, counter - cyclical deficits in a future downturn. if surpluses are not built up we increase the risk of requiring pro - cyclical fiscal austerity policies. xxi my colleague, sharon donnery, deputy governor, central banking, will speak more on these macro prudential measures in her remarks at the dublin economics workshop on 14 september, so i will not discuss in detail here today. we are also seeking to ensure that the financial services industry pays the direct costs of these necessary enhancements to regulation and supervision. over the coming years we are aiming to increase the levy paid by regulated entities to 100 % of our regulatory costs. looking ahead the irish financial system, and the banking system specifically, is undoubtedly stronger and more resilient that it was 10 years ago. after many years of contraction, it is also growing again, becoming increasingly complex in nature and increasingly internationally focused, in part due to brexit. so, there are grounds for optimism. however, as i have touched on, weaknesses remain, and as i have also referenced, it is likely that we are closer to the next downturn than we are to the banking crisis – a decade on the start of the last one. even as the sun is shining today, there are clouds on the horizon. one can hope that future storms are not as severe as the last one, but storms there undoubtedly will be. in this context, it is noteworthy that both globally and domestically the levels of debt that characterised the build up to the crisis has not disappeared. in fact, global debt levels are higher now than they were in 2009

workforce is aging and our labour force growth is declining. we have to compete against more countries in a globalized marketplace, and we are facing greater direct competition as emerging - market economies move up the value chain. these forces put a premium on raising our productivity growth. but our productivity performance has been particularly weak in recent years. and this now risks holding back the recovery if competitiveness challenges restrain net export growth. as stretched households in canada pull back and government stimulus unwinds, business investment and net exports must play bigger roles in driving growth. if we needed another more immediate reason to invest in productivity gains and improve our competitiveness, this is it. at the bank of canada we don ’ t forecast the value of the canadian dollar, but counting on a much weaker dollar to regain business competitiveness looks like a risky business model. a cheap currency is not a business strategy. business needs to get on with investing and turning these investments into lower unit labour costs and improved competitiveness. the first part – more investment – is at least under way, and the latest productivity numbers offer a glimmer that we could begin moving in the right direction on competitiveness. businesses in canada can let things happen, make them happen, or see what happened. let ’ s make them happen. thank you. bis central bankers ’ speeches appendix canada ’ s competitive imperative : investing in productivity gains chart 1 emerging - market economies drive global growth chart 2 global commodity prices have risen bis central bankers ’ speeches chart 3 real gdp growth in canada chart 4 canada ’ s household debt - to - income ratio on the rise bis central bankers ’ speeches table 1 contributions to average annual real gdp growth ( percentage points ) chart 5 personal savings rate in canada projected to remain near historic lows bis central bankers ’ speeches chart 6 the contribution of household expenditures to gdp is expected to fall but remain well above its historical average chart 7 firms intend to invest bis central bankers ’ speeches chart 8 business fixed investment is expected to rebound strongly chart 9 canadian exports fell sharply in the recession bis central bankers ’ speeches chart 10 canada ’ s current account balance has declined sharply chart 11 canada is losing share of the u. s. import market bis central bankers ’ speeches chart 12 a strong canadian dollar and poor productivity explain canada ’ s weak competitiveness chart 13 labour productivity growth : canada and the united states bis central bankers ’ speeches