in the risks posed to financial stability. 2 ) on capital flows and global risks for the most part, the situation in russia reflects overall improvement in sentiment on global markets in the context of a revival in economic activity in the leading economies. we have begun to see clear signs that economic dynamics are being restored not only in the u. s., but also in the eurozone, where the economic situation has been unstable for a long time. in general, the indices of economic activity pmi for both the leading economies and the global economy as a whole currently sit at 6 - year highs. the upward swing of the economic cycle is gaining momentum. these conditions have led to increased optimism of global market participants and growth in capital inflow on the markets of emerging economies. many countries, including russia, have seen improvement in the index of attractiveness of carry trade ( carry - to - risk ). this index reflects the rate differential between sovereign obligations, with regard to risk measured against the volatility of the exchange rate. the recent growth of this index for russia is associated not so much with change in the rate differential, but with the lower volatility of the ruble, which has already matched the level of a large number of emerging markets with successfully implemented inflation targeting policies, and that of some developed countries. in response to these changes, questions have arisen regarding the volume and potential sustainability of capital inflows to russia. it should be noted that statistics do not confirm the hypothesis that carry traders have brought about a mass influx of funds on the russian market. according to the latest balance of payments assessment published by the bank of russia, the main foreign exchange earnings in the first quarter of this year were related to the current account, and amounted to us $ 22. 8 billion. net private capital outflow in the first quarter of 2017 – amounting to us $ 15. 4 billion – was actually a reflection of this influx, as the russian banks, having received export revenue in their accounts, incorporated this revenue as foreign assets, primarily in the form of deposits in correspondent banks. therefore, the strengthening of the ruble that we saw in the first quarter of 2017 can in large part be attributed to inflows of foreign currency through foreign trade channels, and in small part to other factors, such as carry trade operations. statistics show that the total volume of capital inflow is not huge, however in some markets the share held by non - residents has recently increased. such markets include the

would expect banks to draw from the scheme. going forward, the fls should help to keep funding costs down by serving as a backstop marginal funding source if market funding costs were to rise. stage 2 : quoted terms and credit availability the second stage in achieving our objective was a reduction in lending rates to the economy and an improvement in credit availability. this has happened, albeit more slowly than initially anticipated. on average we ’ ve seen rates on two - year fixed rate mortgage products come down by around 110bps since the fls was announced, and floating rate mortgages by a bit less ( around 60bps ) ( chart 6 ). the availability of household credit, particularly secured credit, has improved according to recent credit conditions surveys by the bank of england. bis central bankers ’ speeches chart 6 changes in quoted mortgage rates and indicative uk bank funding costs over the first year of the fls ( a ) change in mortgage rate change in bank funding cost ( b ) percentage points 0. 0 - 0. 5 - 1. 0 - 1. 5 75 % ltv two - year floatingrate mortgage 75 % ltv two - year fixed - rate mortgage 75 % ltv five - year fixed - rate mortgage 90 % ltv two - year fixed - rate mortgage - 2. 0 sources : bank of england, bloomberg and bank calculations. ( a ) change between 30 june 2012 and 30 june 2013. ( b ) for fixed - rate mortgages, calculated as the sum of indicative uk bank secondary market bond spreads and the swap rate corresponding to the term of the mortgage. for floating - rate mortgages, three - month libor is used in place of a swap rate. for more details see chart 1. 8 of the august 2013 inflation report. it ’ s harder to measure what has happened to lending rates to businesses as the borrowers and loan products available are less homogenous than in the household sector. lenders report that loan spreads have fallen for companies of all sizes, and that credit availability has increased, but the improvement has been less marked for small and medium - sized businesses. we have seen banks take different approaches to sme loans : one bank has scrapped some of its arrangement fees, another is offering guaranteed discounted borrowing costs and another offers a cash back scheme. so one can ’ t capture the impact of the fls on the cost of borrowing for businesses in a single simple, headline, interest rate measure. survey evidence from the federation of small businesses suggests that