of global gdp in 2018 to be over 3 % below what the imf expected at the time of the brisbane summit. we need to live up to china ’ s g20 priorities. structural reforms with a long - term focus but a short - term implementation horizon. determined reform of the global architecture for sustainable capital flows. the development of our essential macroprudential frameworks and the implementation of our financial reform commitments to address new vulnerabilities. these will allow monetary policies to fully bridge to a better future. conclusion that future needs the arms of macro policy to operate in close concert, domestically and internationally. demand stimulus alone will not sustainably reflate the global economy. moreover, sustained low rates could strain the capacities of macroprudential policies. at their roots, fiscal, monetary, financial and structural policies are deeply complementary, operating through many of the same channels. a stronger financial system can better channel savings to investment, building demand in the short run and productivity in the long run. monetary stimulus is more effective if, in a deflationary environment, other policies can also give households and firms the confidence that global reflation is in prospect. and structural reforms can boost long - run wealth allowing monetary policy to bring forward spending from future incomes that are real and not ephemeral. all must recognise the imperative of avoiding the global liquidity trap. not to beggar - thyself via beggar - thy - neighbour. not to obsess over process at the expense of productivity. but by building resilient domestic demand and sustainable cross border capital flows, we in the g20 can redeem an unforgiving world. bis central bankers ’ speeches annex chart a1 secular drivers of lower real rates – quantification source : taken from rachel and smith ( ibid. ). bis central bankers ’ speeches

in post - tax return on equity, 2006 - h1 2015 ( a ) - 11 due to reduction in leverage - 4 due to fall in return on assets - 7 of which : net interest income - 4 trading income and fees - 6 misconduct costs - 3 other income and expenses - 4 impairments operating expenses increases due to sources : published accounts, bank data submissions and bank calculations. ( a ) uk banks are barclays, cooperative bank, hsbc, lloyds banking group, nationwide, rbs and santander uk. more fundamentally, banks are out of favour because of a new - found exasperation with their returns rather than due to old concerns about their resilience. uk banks, for example, have seen a sharp decline in profitability since the crisis, with average group - level post - tax returns on equity falling from 17 % in 2006 to 6 % in the first half of 2015 ( chart 6 ). of course, with hindsight, a substantial proportion of the pre - crisis return bis central bankers ’ speeches was ephemeral, reliant on short - term funding, capital - light balance sheets and massive synthetic leverage. banks are facing continuing pressures on their business models from a number of sources, including : • the consequences of a low growth, low rates environment with ongoing private deleveraging ; • the impact of a new regulatory framework designed to fix the fault lines that caused the crisis ; and • the effect of determined progress on removing the implicit public subsidy of toobig - to - fail. finally, some residual concerns about regulatory uncertainty, particularly in the euro area, may have been secondary reinforcements to the macroeconomic drivers of recent market turbulence. financial reform and the state of the financial system however, this is not 2008. the largest cross - border banks are considerably stronger than during prior episodes of market stress. common equity requirements are seven times the pre - crisis standard for most banks. for global systemically important banks ( g - sibs ), they are more than ten times higher. global standards require banks to hold much higher liquid asset buffers, to strengthen their trading books, and to reduce and simplify the formerly complex web of interbank exposures. in response, banks have built higher and better quality capital buffers ( chart 7 ), largely through retained earnings, and have reduced leverage. between 2008 and 2015, advanced economy g - sibs raised close to $ 800bn of equity, while almost $ 200bn was raised by major uk