this increasing interconnectedness is building up systemic risks and raises the chance of financial contagion spreading throughout the caribbean region, especially if another major hurricane strikes or another government undertakes a significant restructuring of its sovereign debt. i must remind you all that we are living in one of the most natural - disasterprone regions in the world : the six small island states in the eastern caribbean currency union stand out in terms of the frequency of hurricanes. a natural disaster can be expected to hit the eastern caribbean roughly once every two and a half years. the caribbean is also home to nine small island states considered to be among the world ’ s heavily indebted countries, with a rising probability of debt default. grenada is currently negotiating a restructuring of its sovereign debt, which, when completed, will bring to ten ( 10 ) the number of sovereign debt restructuring episodes in the caribbean within the past decade. we, therefore, cannot afford a tick - box, compliance mentality. as supervisors, we must not underestimate these gathering risks. we must expand cross - border cooperation through exchange of information and policy collaboration. remember … the caribbean ’ s financial ecosystem is at stake. as i close, let me encourage you to use this opportunity for discussion, but not just as a talk shop. take this meeting seriously, as given our current situation what is discussed here can have the potential to impact the caribbean region. take this experience and return to your home, wiser and ready to act. as supervisors, we need to remember who are at the heart of the financial system. we need to remember it is real human hearts : a teacher with a loan, a market vendor with a savings account in a bank, a bus driver with an insurance policy, or a doubles vendor with an investment in a mutual fund. our duty is to these market participants, who all rely on us. when the story is told, let it be said you, we as the guardians of the financial system, did all we could in our power, to protect the economies of our region. to conclude, let me reiterate the following key messages : • first, clico and its contagion was an early warning for us in the caribbean. rising financial interconnectedness is building up systemic risks and the likelihood of financial contagion throughout the region. this requires supervisors to see the whole financial ecosystem and not just the individual trees. • second, changes to supervision are our protection against those gathering financial storms. supervisors must

that the fluctuations in economic activity would vary the size of an output gap, creating pressure up or down on inflation while see fujiki, hirakata and shioji [ 2012 ]. another cross - country inspection based on a broader sample, including developing countries, does not detect positive correlation between inflation and population growth in the 2000s and in earlier periods likewise. see kimura, shimatani, sakura, and nishida [ 2010 ]. bis central bankers ’ speeches attracting or discouraging immigration that amplifies variations in population. that hypothesis, however, appears to be impertinent in some countries including japan where the impact of immigration on the total population is extremely small and thus can be disregarded. on that ground, business cycle fluctuations have had a minimal impact on demographic changes. a closer look at the case of japan confirms the increasingly positive correlation between inflation and population growth since the 1990s ( chart 16 ). that would reflect the momentum towards real income creation being undermined by population aging. as i have discussed, repercussions of the bubble - burst, the rapid aging and stagnation of productivity have been underway in japan. against the backdrop, the real per capita gdp growth rate has remarkably declined from somewhere around four percent back in the 1980s to almost one percent these days ( chart 17 ). with the yet - to - accelerate population aging well envisaged for the foreseeable future, the decline in the real gdp growth rate could undermine the medium - to long - term expectations for potential growth, giving rise to a lower permanent income of households. the decrease in potential growth, which effectively means a stagnant supply capacity, gives rise to a lower permanent income. on the flip side, the corresponding contraction in aggregate supply would offset such decline in aggregate demand. simultaneous changes in aggregate demand and aggregate supply keep the price level unchanged. i reemphasize the fact, however, that the public had long remained by and large unaware of the dangers created by demographic changes but, over time, the awareness has slowly been phased in. along with such gradually phased - in public awareness, yet - to - materialize declines in gdp growth have also been factored in, precipitating today ’ s decrease in aggregate demand and all the forward - looking responses have come into play behind japan ’ s deflation. 5 in the meantime, the real per capita gdp growth rate in most of american and european advanced economies has declined to japan ’ s neighborhood range