remarks by mr. javier guzman calafell, deputy governor at the banco de mexico, on “ emerging markets in an era of dollar appreciation and volatile capital flows ”, at the state street global advisors ( ssga ) - official monetary and financial institutions forum ( omfif ) roundtable “ policy rupture : challenges and opportunities for public investors ”. london, april 4, 2017. 1 i would like to start by thanking the organizers for the invitation to speak at this panel. several years after the outbreak of the global financial crisis, the world economy continues to display a weak performance, despite the recovery that has taken place since then. following the rebound observed in 2010, the growth rate of global gdp has been on a declining trend, averaging 3. 5 percent annually during the period 2011 - 2016, a full percentage point below its precrisis trend. it should be noted that the above owes to a large extent to developments in the advanced economies ( aes ), whose sharp gdp contraction and slow recovery in the aftermath of the crisis limited the increase in real gdp from 2007 to 2016 to a mere 10 percent. even though cyclical factors explain to some extent the aforementioned trends, the markedly low speed with which activity has recovered, as well as the perceived fragility of the process, point in the direction of important structural forces at play. indeed, global demand for both capital and the opinions and views expressed in this document are the sole responsibility of the author and do not necessarily represent the institutional position of the banco de mexico or of its board of governors as a whole. consumption goods appears to remain subdued due in part to an excess of savings over investment, further compounded by the long - lasting deterioration of balance sheets across sectors and economies as a result of the crisis. on the supply side, factors such as low productivity growth and demographic trends, especially in the aes, in combination with so - called hysteresis effects from the crisis, are considered to be exerting downward pressure on growth. all in all, this has given rise to concerns about the possibility of secular stagnation and therefore a much less dynamic outlook for the global economy. 2 the situation is further clouded by parallel and reinforcing trends in international trade flows. not only is the global trade volume of goods and services estimated to have recorded last year its lowest pace of expansion since the height of the crisis, but its average rate of growth has been cut by over one half between 2000 - 2007

they at their very best slow down the build - up of stability risks within the financial system. this has several important policy implications. for one, despite of the limitations i sketched, we should remain committed to full implementation of the international reform agenda. limitations in scope and impact cannot be an argument to deregulate. but on top of this, we should continue to work on structural challenges within the economy and its financial system. importantly, we should also continue to think about the implications for the overall macroeconomic policy mix. the observation that macroprudential policies cannot be fully relied upon to contain systemic risks would also have to be taken into account in the conduct of monetary and fiscal policy. to be clear : it should not have an impact on the mandate or direction of monetary policy, which would continue to be fully geared towards price stability. however, financial stability would have to be a relevant factor to take into account within the design and the proportionality of policy measures. obviously, these are complex observations that require further analysis. i look forward to discuss these and related matters in our quest for further operationalization of effective macroprudential policies.