has been the implications of prospective us monetary normalisation. the announcement by the us about tapering about a year ago prompted sharp currency falls and asset price declines in several emerging markets. further bouts of market volatility have been observed since then, including in january and february this year. the episode has renewed debate about the spillover effects of monetary policies in advanced economies. there is no academic consensual view about the causes of capital flows. in - depth studies show that perceptions of global and relative risks, accompanied by mere volatility of capital markets associated with uncertainty, provide better explanations than monetary policy effects. 1 nevertheless, spillovers are an unavoidable aspect of financial integration and the negative aspects of monetary normalisation in the us should not be helene rey ( 2013 ) “ dilemma not trilemma : the global financial cycle and monetary policy independence ”, jackson hole, kansas fed conference. bis central bankers ’ speeches overstated. we forget too easily that accommodative monetary policy has had positive spillovers since the start of the financial crisis. the gradual exit from unconventional policies in the us reflects the welcome recovery of a key pillar support for the global growth. clearly, policymakers in advanced economies should not be exempt from the responsibility to tread with care. in particular, clear and credible communication by central banks is important to minimise uncertainty and negative spillover effects from exiting unconventional monetary policy. international cooperation in an era of globalisation can provide significant gains. i agree with raghuram rajan when he highlights that global welfare does not depend only of domestic optimization of policies, important as they are. emerging markets should also accept more flexibility in their exchange rates. the fact that in the second round of instability the countries with imbalances were the ones that suffered most, suggests that sound domestic policies are a crucial buffer to minimise adverse spillovers. but i would also emphasise that the international community – mainly the imf – must provide help in the form of improved liquidity facilities that reduce the incentive to build up excessive reserves and can be activated without stigma. the structural slowdown in emerging markets a second global theme has been the remarkable moderation of growth in emerging markets. to take just one statistic, aggregate emerging market growth has slowed sharply in recent years, from just under 8 % in 2010 to around 4. 5 % last year. one component of this slowdown has been a structural moderation. in retrospect, the early part of this century

vitor constancio : challenges for global economic growth remarks by mr vitor constancio, vice - president of the european central bank, at the 71st plenary meeting of the group of thirty, versailles, 30 may 2014. * * * thank you for the invitation to speak in this session. our subject this morning is the “ challenges for global economic growth ”. but let me first focus on the positive. compared to this time last year, or indeed anytime since the financial crisis, our starting point seems brighter. notwithstanding the dip in growth in the first quarter of the year, we see now evidence of greater traction in many advanced economies. progress, of course, varies across countries. private sector deleveraging is moderating. the drag from fiscal consolidation has lessened. improving labour markets are bolstering confidence and supporting demand. but growth remains modest. in many countries, gdp levels are still below or barely above pre - crisis peaks. euro area gdp in 2013 was 1. 7 % below 2007 levels ; us was 5. 9 % higher ; japan was 0. 4 % higher ; and in all countries growth rates are far short of pre - crisis trends. the recovery path remains fragile and unemployment is too high, particularly in europe. policy actions in the past two years have helped to curtail near - term risks. but risks to global growth remain tilted to the downside. and new challenges and sources of risk have arisen. there are now too many potential headwinds : a decline in potential growth of advanced economies resulting, among other things, from negative demographic trends and lacklustre investment ; a new trend of lower growth of world trade possibly stemming from limits to continue extending supply chains ( the elasticity of trade to gdp used to be close to 2 and has been flat at 1 since 2008 ) ; a retrenching of financial integration ; a structural decrease of emerging countries growth rates. in more immediate terms, the risks stem from the possible reversal of risk assessment and consequently of compressed risk premia ; secondly, risks relate, in particular to emerging economies as they adjust to normalising monetary conditions in the us and confront structural headwinds following a decade of stellar growth. in my remarks i will touch on some of these general challenges for the global outlook, before discussing specific issues for the euro area. the global challenges the spillover effects of monetary normalisation in the us at the global level, perhaps the issue that has received the greatest focus in recent months