to surplus. perhaps as important, the scale of the differences has grown with more countries running surpluses or deficits of over 5 % of gdp. oil and other commodity inflation is part of the story, of course, but that does not account for the large current surpluses in most of east asia. here strong manufacturing growth resulting from higher labour productivity has not been matched by higher domestic spending so savings have grown ahead of even dramatic investment growth. a deliberate policy of fostering export industrial growth has slowed the rise of exchange rates that would reduce these imbalances. as a result the build - up in eme foreign assets have been held mainly as central bank reserves especially in asian countries ( chart 3 ). in total the foreign assets now held by eme central banks and governments is about $ 7 trillion dollars, which compares with only $ 60 billion gross foreign assets held by the uk government. many emerging economies concluded after the asian crisis a decade ago that they needed bigger liquid reserves in traditional government debt to defend themselves against volatility in financial markets even when that carried the likelihood of a negative return ( taking account of expected exchange the kuwait investment office is the in - house investment arm of the kuwait investment authority ( formerly known as the kuwait investment board ) and was established by sheikh abdullah al - salem al - sabah on 23 february 1953. edmund hillary and tenzing norgay reached the summit on 29 may 1953. these figures include the nics. excluding nics the estimated surplus is $ 596 billion ( 1. 1 % ). latest data show that current account deficits were 5 % of gdp or above not only in the united states but also in spain, greece, portugal, australia, new zealand, uk and iceland. rate movements ). but when the reserves outstripped the levels needed for that purpose, it was natural to look to increase the returns on investment by widening the range of investments. 5 and in the next few years, these current account surpluses are likely to remain high and the build up of foreign assets by governments in oil exporting and asian countries is likely to continue. according to the imf ’ s forecasts, the combined current account surplus of china and oil - exporting countries will be around $ 800 billion over the next 3 years. and the imf estimates that sovereign wealth fund assets could grow to $ 6 - 10 trillion within the next 5 years. the impact of swfs on financial markets these are huge numbers and swfs have become prominent

remain impaired, reducing an important source of funding for bank loans. finally, changes to accounting rules, beginning in 2010, will require many banks to move a large volume of securitized assets back onto their balance sheets, perhaps putting further pressure on bank capital. during the financial crisis, a number of lending relationships have been severed as individual banks sought to reduce loan portfolios, or concentrations within those portfolios, or as banks failed or merged. established banking relationships are particularly important to small businesses, who generally do not have access to the broader capital markets and for whom credit extension is often based on private information acquired through repeated interactions over time. when existing lending relationships are broken, time may be required for other banks to establish and build such relationships, allowing lending to resume. some banks may be overly conservative in their small business lending because of concerns that they will be subject to criticism from their examiners. while prudence is warranted in all bank lending, especially in an uncertain economic environment, some potentially profitable loans to creditworthy small businesses may have been lost because of these concerns, particularly on the part of small banks. indeed, there may be instances in which individual examiners have criticized small business loans in an overly reflexive fashion. as i will discuss later in my testimony, the federal reserve has worked with other bank and thrift supervisors to ensure that supervisory policy does not unnecessarily constrain credit to creditworthy borrowers. the reduction in the availability of credit, however, is not the whole story. there is also less demand for credit. the most severe economic downturn since the depression, resulting in high levels of unemployment and following significant increases in personal debt levels during the past decade, has suppressed demand for goods and services produced by all businesses, including smaller firms. many businesses are, in turn, reluctant to make new investments until they are confident that consumer demand will continue to strengthen. business inventories, a key component of gross domestic product over the business cycle, unexpectedly declined 0. 2 percent in december after rising by a revised 0. 5 percent in november. it is notable that banks report utilization rates of existing lines of credit to be at historic lows, despite the fact that, in many cases, this credit is already approved and generally priced attractively. according to recent surveys conducted by the national federation of independent businesses ( nfib ), financing conditions continued to be ranked as the top business concern by only a modest fraction ( less than 5 percent ) of