will continue, and yield curve inversion may even deepen on major markets, and knock the door in some emerging markets 20. pimco seems to subscribe to this possibility, although they do not use asset shortage argument, but they do say : “ local markets investments may provide the greatest divergence of returns within the em universe, with those “ developing ” economies furthest along the road to “ developed ” market status able to enact traditional policy prescriptions in a slowing global economy and therefore providing enhanced return potential to local fixed - income instruments “. as a central banker in emerging market economy well advanced on the road to developed status i ask myself a question which view of the world is correct, because it may have different implications for growth and inflation prospects. should we expect slowing external demand combined with local currency strength or combined with a local currency weakness. these are important questions ( even in the context of falling exchange rate pass - through ) which will be empirically answered next year. today we can think only in balance of risks terms. evidence in the last few months, including december bis report 21 shows, that official institutions may have accelerated their attempts to diversify reserve assets, which may mean more demand for high - yielding assets and for non - core currencies, and in particular for emerging market currencies ( recall government of singapore investment corporation statement that emerging market weight in their assets under management will be increased, recall a number of hints given by oil exporting nations, or recall the statements given by gomez m. ( 2006 ) „ is it safe? ”, emerging markets watch, pimco, september 2006. i acknowledge that it would be against the historical evidence that after the end of the tightening cycle and the beginning of easing cycle the fall of 2 - year rates was deeper than that of 10 - year rates. but it is precisely the issue we discuss here : are historical patterns a good guide for the future? bis ( 2006 ) „ quarterly review ”, bank for international settlements, december 2006. chinese authorities that the central bank should be more open - minded about cooperating with the government institutions in managing huge reserve assets ). so, ceteris paribus, this factor will imply balance of risks skewed towards further risk premia compression in emerging markets in situation when us growth slows and expected returns in developed markets drop amid poor growth outlook. the important question is how it will end? temporary us growth slowdown is unlikely to solve global imbalances

you that the digital economy is a promising way to raise trend growth and overall living standards. we cannot be satisfied, though, if some of the potential gains are left on the table, because many people will be left behind and important markets will be virtually uncontestable. it does not have to be this way if we choose a road for policy that effectively manages the 5 / 7 bis central bankers'speeches downsides of innovation without stifling it. of all the areas where we could develop and implement a better strategy, here are my top three : ( i ) develop a dynamic workforce with the skills to match the jobs, and encourage more labour force participation ; ( ii ) keep market power in check, particularly the power that comes from control of consumer data, to encourage competition and limit monopoly profits ; and ( iii ) manage the growing operational risks associated with the digital services that are provided by a concentrated set of firms to systemically important financial institutions. we will need to judge wisely when it is best to use public policy tools to manage risks and when to let private enterprise work its magic. we ’ ll need to work together and in the field to inform these judgments. i am confident that, together, the g7 will show leadership and will build with the private sector a shared sense of responsibility for the future. i would like to thank gurnain k. pasricha, lori rennison and eric santor for their help in preparing this speech. 1 the data for this calculation are taken from m. roser and e. ortiz - ospina, global extreme poverty ( 2018 ). poverty is defined as a consumption level below int $ 1. 90 per day, adjusting for price differences and inflation. 2 see international monetary fund, world economic outlook, chapter 3, “ understanding the downward trend in labor income shares, ” april 2017 ; and g. michaels, a. natraj and j. van reenen, “ has ict polarized skill demand? evidence from eleven countries over twenty - five years, ” review of economics and statistics 96, no. 1 ( march 2014 ) : 60 – 77. 3 according to mckinsey & company, 46 per cent of tasks could be automated in the united states using current technology. in canada, the share is slightly lower ( 42 per cent ). see c. lamb, “ the talented mr. robot : the impact of automation on canada ’ s workforce, ” brookfield institute, june 2016. 4 data