oil as well as in other non - oil commodities has been increasing. an example of the risks that can be posed by such activity in non - oil commodities markets was the episode involving the amaranth advisors hedge fund that collapsed in september. the fund ran into difficulties after its leveraged bets in the natural gas futures market – which had been predicated on expectations of hurricane frequency and intensity that did not materialise – suddenly turned sour. regarding oil spot prices, after reaching new historical highs in early august, they subsequently declined substantially but have remained at high levels. the decline was mainly attributable to a reduction in geopolitical tensions, a receding threat of hurricanes in the gulf of mexico and an easing of petrol market tightness. all of these factors led to a decline in speculative positions which contributed to the rather abrupt downward adjustment in the price of oil. looking forward, the implied probability distribution of future oil prices, extracted from options contracts, indicates that considerable uncertainty surrounds near - term oil futures prices, with very wide confidence intervals. moreover, the balance of risks is tilted towards the upside [ see chart on the right of slide 3 ]. iii. 2 global and euro area financial markets when assessing the potential risks in the global and euro area financial markets, two main sources of vulnerability can be identified. the first concerns the persistently low levels of long - term interest rates and credit spreads which have been associated with a “ pricing for perfection ” in corporate sector capital ( credit ) markets and emerging economy debt markets in the sense that valuations in these markets appear to be based on very favourable expectations regarding future economic outcomes and low risk premia. the second concerns the growth in the volume and complexity of credit derivatives markets, coupled with the increasing presence of hedge funds in these markets. an abundance of liquidity in global financial markets, although its rate of growth has moderated, together with very high saving rates in some emerging market regions relative to domestic investment opportunities partly explain why long - term interest rates and credit spreads have been remarkably unperturbed by the shift to less accommodative monetary policies in the g3 economies and the resulting withdrawal of global liquidity. rising short - term interest rates have instead produced flatter, or inverted, market yield curves in the six months following the finalisation of the june 2006 fsr. [ see chart on the left of slide 4 ] the renewed “ conundrum ” of low long - term government bond yields seems, in part,

for too long, losing valuable human capital and finally becoming structurally unemployed, a tragedy for them and their families, and a loss for society. there is some evidence that the prolonged period of negative output gap in the euro area since the crisis has weighted on potential. potential growth is estimated to have fallen from 1. 6 % a year over the period 2000 – 07 to 0. 7 % over the first five years of the crisis. 1 skill mismatch has increased in a number of countries, in part arising from the shift in sectoral composition as the construction sector shrunk rapidly. 2 the high rates of youth unemployment are also likely to result in labour market “ scarring ”. the financial crisis and the bank - based nature of finance in the euro area amplified the slowdown in potential growth. the transmission of monetary policy in the euro area has been impaired by fragilities in the banking system, compounded by the overhang of public debt, on which i will shortly say more. loss of access to finance can have a marked impact on business performance and in aggregate lower potential output. to put some perspective on the problem, let me highlight recent research carried out for the ecb looking into the impact of loss of finance on firm performance in the euro area. 3 the research looks at thousands of loan applications made by small and medium - sized enterprises to a major german bank between 2009 and 2012. in particular, it focuses on firms that are around the cut - off line for loan acceptance. these firms are in general very similar in terms of balance sheet and profitability metrics, but some lie slightly above the line and some lie slightly below. the study maps the outcomes for those firms in the year following the loan rejection. on average, a rejection leads to a 9 % fall in assets, and lower investment and employment. the effects are amplified in firms with low liquidity, with such firms seeing a 5. 6 % fall in investment and a 7. 2 % fall in employment. yet these are not unprofitable or inefficient firms – the average return on assets for firms just below the cut - off line is a little over 14 %. the long - term risk from the prolonged period of sluggish growth also extends beyond real activity 2 / 6 bis central bankers'speeches into prices. a key part of our monetary policy is to anchor inflation expectations around our – price stability aim of a rate of below, but close to two percent over the medium