##litation. to increase the profitability of our foreign exchange earning sectors we must improve the productivity of labour and the efficiency of capital, make our products and services superior in every market category, enrich our products ( sports, heritage and cultural tourism, for example ), do targeted marketing and develop new markets. it is critical that we improve service quality and set our standards at the very highest level. there are many success stories in each of these areas and we should always keep them in mind. we should celebrate these achievements, and use them as inspiration for what still needs to be done. bis central bankers ’ speeches the fiscal adjustment : the fiscal adjustment is designed to stabilize the economy by matching foreign exchange outflows to inflows, and to slow and eventually eliminate the drain on foreign exchange over the next several months. reserves are held for the purpose of financing imports in the interim, while the measures take effect. we expect reserves to fall during that period, but we expect that once inflows and outflows are brought into balance, our foreign exchange reserves will return to levels that have been sustained since 2008. barbados has no problem in servicing government debt. service costs on the external debt are less than 10 % for the foreseeable future, and the net public sector ratio to gdp is a moderate 62 %. barbadians have every reason to be confident of our future : barbadians have bested the caribbean through strength of character, sound decisionmaking, and investing in ourselves. the quality of our lives reflects our achievement. we have beaten the odds before, and we can do it again ; experience has taught us that it is not as difficult as it seems, once you buckle down to the task. patience, persistence, determination and commitment to excellence will win the day. there is something that each and every barbadian can contribute to growth : for entrepreneurs it is the development and promotion of projects to prospective foreign investment partners ; for government it is the upgrade of business facilitation ; and for workers, the improvement of productivity and the development of the barbadian reputation for excellence. finally, the narrative matters. we must together build our self - confidence, by celebrating our successes, to give us energy for tackling the challenges ahead. bis central bankers ’ speeches

policy - makers for a long time. but the outcome of this process is well known. it resulted in buoyant credit growth, high indebtedness by the private sector, excessive wage increases, and increased risk - taking by banks. contrary to expectations, aggregate supply did not catch up with demand. this was due to the misallocation of capital in non - productive sectors, and due to important structural rigidities, which policy - makers neglected to tackle in the boom years. concerning the public sector, good times were not used to build up the necessary fiscal leeway and asset booms made fiscal positions appear sounder than they were. in some booming economies ( e. g. ireland and spain ) government debt ratios declined, but given the bis central bankers ’ speeches extent to which ample fiscal revenues had been linked to unsustainable asset market developments, structural fiscal balances remained fundamentally weak. finally, prices in the non - tradable sector also ran ahead of actual increases in productivity during the boom years, leading to real effective exchange rate misalignments. the ensuing, persistent losses of competitiveness translated into an accumulation of external imbalances. the facts of the lehman collapse in late 2008 and the subsequent sovereign crisis in mid - 2010 onwards are well known. as financial markets realised that the combination of high private indebtedness, external imbalances and structurally weak fiscal positions was unsustainable, a “ sudden stop ” occurred. private cross - border financial flows dried up, bank lending collapsed and spreads increased sharply in the countries most affected by the crisis. crisis management the policy response of euro area national and supranational institutions was driven by this analysis of pre - crisis developments. pre - crisis imbalances had to be redressed. excessive leverage in both the public and private sectors had to fall. countries with large external debts ultimately needed to service and repay their obligations in the form of real goods and services exported abroad. an “ expenditure switching ” was necessary, i. e. an increase in exports and a rotation of internal demand towards domestically produced goods, implying relative price adjustment. this raises three questions. first, which adjustment polices would in theory avoid large employment costs? second, why were adjustment costs in fact so high for stressed countries? third, could we have done things differently? let me elaborate on each question in turn. macroeconomic adjustment policies there is one obvious mechanism which delivers the required macroeconomic adjustment without unnecessary costs : a