as a quarter of world trade and produced around a tenth of global gdp. today, those shares have both fallen under 5 %. for details on how the historical estimates are calculated, see ‘ the uk at the heart of a renewed globalisation ’, speech given by mark carney, 24 october 2013, available at http : / / www. bankofengland. co. uk / publications / documents / speeches / 2013 / speech690. pdf. all speeches are available online at www. bankofengland. co. uk / speeches the resulting cost to our citizens has been tremendous. over the past decade, uk average real earnings th have fallen for the first time since the middle of the 19 century. trust in the financial system has plummeted. over the past decade, the uk and its key g20 partners have been fixing these fault lines and creating a system that is safer, simpler and fairer. the system is safer because banks are now much more resilient, with capital requirements for the largest global banks that are ten times higher than before the crisis and a new leverage ratio that guards against risks that may seem low but prove not. the financial system is simpler. as banks have become less complex and more focused, they are lending more to households and businesses and less to each other. a series of measures are eliminating toxic and fragile forms of shadow banking while reinforcing the best of resilient market - based finance. and more durable market infrastructure is simplifying the previously complex – and dangerous – web of exposures in derivative markets. the financial system is fairer because of reforms that are ending the era of “ too big to fail ” banks and addressing the root causes of a torrent of misconduct. the benefits of these painstaking efforts are beginning to be realised. the global financial system is moving from fragility to resilience. the too - big - to - fail public subsidy enjoyed by private systemic banks has fallen by 90 % in the uk. credit is now growing in all major economies. sources of finance are increasingly diversified between banks and markets, helping to keep the cost of finance low. and the system is demonstrating an ability to dampen shocks rather than amplify them. despite this transformation, there are nascent risks that, if left unchecked, could reverse the progress made and ultimately undermine the g20 ’ s objective of strong, stable and balanced growth. indeed, the global financial system is at a fork in the

of europe or perhaps more than a paradox : a conundrum. why is it that not only we did not improve our productivity when the us did it – around the mid eighties – but that we observed on the contrary a very significant diminishing of our productivity? this phenomenon seems to me only half understood through traditional explanations : the impact of specific policies aiming at drawing back to work a significant number of previously unemployed unskilled workers – with a low level of productivity – that have been launched in several european economies ; and a degree of under - investment hampering the stock of capital allocated to each employee. but it explains only around half of the diminishing of the labour productivity growth. the other half seems to be explained by a significant diminishing of total factor productivity which is extremely surprising because it occurs precisely at the moment of powerful historical surge in science and technology. there we are at the heart of the conundrum. the conjecture i would propose is that, under certain circumstances, in a period of very rapid technological and structural changes, the more an economy is inflexible, the more it resists to these changes, to the extent that far from taking advantages of the acceleration in progress in technology its “ total factor productivity “ growth diminishes in comparison with what it was in the period preceding the surge of technology. in other words it seems that there is not only an “ opportunity cost ” for being inflexible in a period of very rapid technological change – i. e not seizing the new opportunities offered by the acceleration of changes - but also a “ direct cost ”, coming perhaps – and there lies the conjecture - from the fact that under the stress of accelerating changes the economy becomes even more inflexible and hostile to technological progress than in more “ normal times ”. the evolution of the “ total factor productivity ” growth in europe seems to confirm that phenomenon. from an average level of 1. 3 % in the 80 ’ s it diminished to an annual average of 1. 1 % during the 90 ’ s and 0. 7 % between 2000 and 2004. these observations are calling urgently for structural reforms, in particular all the reforms that would augment the flexibility of all markets – labour, goods and services and financial – in the euro area economy. the need for structural reforms understanding the reasons of these developments is very important. as also stressed by the oecd 5, the lack of sufficient structural reform in europe is a major cause of