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outflows of capital. some of them will have to undertake structural reforms and consolidate their public finances. this brings us to the second challenge : developments in public finances. this topic is relevant for the us – just think of the government shutdown and the risk of eventually reaching the debt ceiling –, it is relevant for japan and it is certainly relevant for the euro area. ultimately, high government debt impedes economic growth and endangers financial stability. bis central bankers ’ speeches the third challenge is the dampened outlook for emerging market economies. this will shift the global pattern of growth toward advanced economies and will require emerging markets to adjust. 4. regulatory reform now, we have talked about the global economic outlook and we have talked about challenges for economic policy. this leaves us with the third topic that will be relevant for this year ’ s annual meeting : institutional reform. let us take a closer look at the reform of financial regulation. here, we have already made good progress. we have, for instance, agreed upon new capital requirements for banks. these will make banks more resilient against shocks, thereby enhancing financial stability. but we have not reached the end of the reform process. two topics are currently of interest. the first is the issue of shadow banking. shadow banking refers to financial institutions that operate outside the perimeter of traditional banking regulation. we might also use the term “ non - bank banks ”. money market funds or hedge funds are typical examples. as these entities might be a source of systemic risk we have to deal with them in terms of regulation. this issue has already been discussed at the g20 summit in st. petersburg in august. progress has been made and shadow banking will remain high on the reform agenda. the same is true of the “ too big to fail ” problem. this refers to banks which are so big that their failure could bring down the entire financial system. just think about what happened when lehman brothers failed in september 2008. what we need are restructuring mechanisms that will allow such banks to fail without disrupting the whole system. at the conceptual level, we have already made good progress. now, we have to implement the new measures. 5. conclusion ladies and gentlemen, many issues will be discussed at this year ’ s annual meeting of the imf and the world bank. i have highlighted a few of them but left out others. in the context of the imf, there will certainly be debates on quotas and governance. at the same time, there