seen, not unreasonably, as costly by those adversely affected, even though the overall outcome is that the country as a whole is considerably better off. ( it is also obvious that, if the terms of trade change really is only temporary, it may not be worth paying these adjustment costs from the perspective of the overall economy. ) the policy challenge for governments will be whether to help these sectors resist change, or to help them adapt to it. we can carry out the thought experiment of imagining that, as a society, we wanted to resist these changes completely and seek to preserve the existing structure of the economy. let me be clear i do not advocate this. but consider what would be involved. we would need, inter alia, to prevent the resources sector from responding to changed prices ( preventing any increase in its size ). that would probably involve taxing away completely any additional national income resulting from higher prices, and maybe also preventing any additional exploration or capacity expansion to take advantage of strong demand that could be met profitably even at after - tax prices. we would probably need to re - cycle any funds raised overseas, in the process holding down the exchange rate. it is important to note, by the way, that such funds could not be spent at home without adding to aggregate demand and hence risking the inflation we would still be seeking to avoid in this scenario. in the scenario where we want as much as possible to be unchanged, the additional income handed to us by the change in global relative prices all has to be used offshore, one way or another. if all the above could be achieved – a very big if, when one considers the logistics of what would be required – then the economy ’ s structure could, perhaps, remain as it was. this course would mean forgoing the potential for higher export income by investing more in resource extraction ; either those gains would go instead to other resource - supplying countries or, in commodities where australia is a major producer, our lack of supply response would result in further upward pressure on prices. so we would avoid the disruption of structural change, but overall would be poorer than otherwise would have been the case, as would, perhaps, our trading partners. it is hard to believe such an outcome could be achieved and no less difficult to imagine it being thought desirable. realistically, we won ’ t be able to hold the economic structure static in that fashion if there is a major, persistent change in relative prices. nor, i would argue

seppo honkapohja : brief remarks of finnish financial history welcome remarks by mr seppo honkapohja, deputy governor of the bank of finland, at the dinner for the suerf conference, helsinki, 14 september 2017. * * * speakers, organizers and participants of the 33rd suerf colloquium, it is my pleasure to welcome you to the dinner. shadow banking, the theme of the conference is of course highly topical and is also a central concern for financial regulation. i will not try to comment on the conference theme but instead thought to tell you a little bit of finnish financial history in my short welcoming remarks. finland has not experienced any major problems in banking or financial markets during the recent global financial crisis. finland did, however, go through a major financial crisis in the early 1990 ’ s. in fact, the finnish crisis was one of the big five in the table of 18 financial crises in advanced economies in the period from wwi to 2007 ( i. e. before the current global crisis ) developed by ken rogoff and carmen reinhard in 2008. 1 incidentally, both norway and sweden are also among big five. the finnish crisis was a boom - bust cycle, which was to large extent caused by problems in the deregulation of the financial system in the 1980s. before the deregulation, the finnish financial system was tightly controlled with interest rates mostly set by the central bank and controls of external capital movements. financial deregulation led to a huge credit expansion and large inflows of capital. the growth rate in bank lending reached to about 45 % at the end of 1980 ’ s2. the boom period came to an end in 1990 when a rapid decent in real activity ensued. this development led to a major banking crisis which stared in september 1991. large amounts of public funds and some other forms of support had to be employed to counter the crisis. major restructuring of the banking system was carried out to improve the efficiency of the banking system. the banking crisis came to its end in 1996 – 7 when the banks began to show positive profits, though structural changes in the banking system continued much longer. this is in brief the story of the finnish financial crisis in the 1990 ’ s. i should note that shadow banks did not have any major role in the finnish financial system in 1980s and in the financial crisis. however, we saw a little bit of the shadow bank phenomenon in what was called “ grey economy ” and “ grey financial