, thus increasing china ’ s public debt ratio, which is now low at 60 % of its gdp. leaving at the top, as the biggest risk, the rebalancing of the economy which, however, will take years and, in my view, markets will have to learn to live with this. 2. 2 oil prices since june 2014, oil prices have declined by more than 70 %, after having stabilised above us $ 100 per barrel for four years and, more generally, after rising almost continuously since early 2000. by january 2016, oil prices traded around us $ 30 per barrel, a level not seen in the past 12 years ( see figure 7 below ). in the context of weak global growth and zero or negative rate monetary policies, lower oil prices are both a fiscal and monetary policy challenge for major economies. while the positive impact on oil importer countries, and especially households and corporates, should materialize in the medium term, the negative impact on oil exporter countries, particularly on fiscal balances and the exchange rates, is more immediate and could be amplified by the energy export dependence for respective countries. bis central bankers ’ speeches in a monetary policy context, the lower inflation observed in the euro area, for example, driven in part by the oil price decline, could de - anchor inflation expectations from the ecb ’ s target. furthermore, in the us, the pressure on oil prices and subsequent pass - through to lower inflation levels could impact the economy in such a way as to delay the pace of normalisation of the federal reserve ’ s monetary policy. it should also be noted that ( like in 1985 ) today ’ s low oil price is due to a combination of weak global demand and oversupply from oil - producer countries and hence, it is suggested, prices could stay stubbornly low for quite some time. referendum on brexit the uk has entered the final pre - election period for the referendum on britain ’ s possible exit from the eu ( brexit ), which will take place on 23 june 2016, the outcome of which is very uncertain at this stage. i will say a few more things on the importance of the british referendum for the rest of the eu tomorrow morning in my lecture on europe ’ s political economy at the event hosted by the singaporean - german chamber of industry and commerce. today, i will limit myself to only one comment. it seems that the weak pound is the only “ certainty ” across the spectrum of financial markets

other market infrastructure. in brief, persistent negative rates may change expectations and create distortions ( for instance, in terms of saving habits and, in that sense, they may be a topic for behavioural economists to look at ). it is still unknown what their long - term effects will be ( e. g. on the erosion of bank profitability ). in contrast, qe has been tested successfully in the us and the uk and i would also like to remind you that monetary policy – conventional or unconventional – entails considerable time lags. it takes time to see the results at full length. however, there is definitely something positive about negative interest rates : it is a strong reminder that the time has come for other policy tools, including fiscal and structural ones. 2. other global risks 2. 1 china let me now turn to other global risks, starting with a country in this region of the world : china. three are the major risks concerning china, stemming from : a ) its lower growth prospects, b ) significant capital outflows, and c ) rising private debt. china is beginning to rebalance and consolidate its economy. services now account for 51 % of gdp and consumption ’ s gdp share is rising, while the current account surplus dropped to 2. 7 % from 10 % in 2007. even if you accept the lower expected growth rate for china around 6 % in 2016, trade flows to the rest of the world are not significant and this is in contrast with financial flows. only recently i had been invited to give a personal verdict at an event in london and rank the above three downside risks facing china, namely lower growth prospects, capital outflows ( almost us $ 160 billion exited the economy in december 2015, reaching an aggregate amount of almost us $ 1 trillion in 2015, see above figure 6 ) and private debt ( which accounts for about 210 % of china ’ s gdp ). i gave the following ranking from bottom to top. at the bottom, i would place capital outflows, since the instrument of capital controls is always available and these days indeed with the blessing of the imf. i would then place in second position the rise in private debt, since only less than 1 % of it is held by foreigners, and it can be easily turned into public debt, if it comes to the worst, and i mean by that, all these stateowned zombie companies which may lose their state guarantees, but whose debt may well be acquired by the government