arise if the driving forces underlying stronger international financial integration reflect global economic imbalances. it is reasonable to argue that the pre - crisis boom in us real estate and securitisation markets reflected to some extent high foreign demand for safe us assets resulting from “ excess world savings ” in the context of persistent global imbalances. consequently, foreign asset demand not only pushed down the us risk - free interest rate, but also compressed the risk premia on risky assets. the low cost of financing fostered in turn an increase in the level of leverage of the domestic financial sector which exacerbated systemic risk. 8 this interpretation of the events makes an important point, namely that increasing the stability of the global financial system should not be done by pushing back financial globalization, but by first addressing the problem of the global imbalances. a second example of the nuances involved in assessing the destabilising potential of financial integration is banking integration. while in principle it is associated with enhanced efficiency, certain circumstances, such as regulatory arbitrage and lack of transparency in transactions, can exacerbate information problems associated with cross - border banking and lead to misaligned incentives, excessive risk - taking, and underestimating the social cost of contagion. it has also been observed that, while banking integration benefits efficient firms through lower cost of external finance, very rapid integration induces firms to take on excessive leverage, exacerbating the effect of financial crises on the corporate sector. finally, in the context of this crisis, cross - border banking integration has been associated with the transmission of financial distress from banks ’ balance sheets to the corporate sector of countries which were not the origins of the shock. 9 however, this effect has mostly worked through banks which relied predominantly on wholesale funding, rather than on a strong deposit base. 10 and so again, we are left to ponder over a subtle point : it is not integration per se that is to blame for financial instability and its impact on the real economy, but lack of transparency, wrong incentives, sub - optimal regulation, and certain flawed banking business models – all of which may, but certainly must not necessarily accompany financial integration. caballero, r., and a. krishnamurthy, 2009. “ global imbalances and financial fragility. ” american economic review 99, 584 – 588. popov, a., and g. udell, 2010. “ cross - border banking and the international transmission

process. scope for growth of rgsm the rgsm, which forms part of the capital market in the eccu, is indicative of the benefits that can be derived from our single financial space : a ) a country with a small population like dominica of 72, 000 persons can expand its potential investor base to nearly 630, 000 across the eccu. b ) investors in any eccu country can make an investment without worrying about the impact of a depreciation in the currency on their capital. c ) investors in any eccu country can make an investment without worrying about exchange controls restricting repatriation of principal and interest. d ) also, investors in government securities do not have to worry about taxes on these investments. e ) licensed brokers can operate across the space without let or hindrance. at this juncture, our data indicate that less than 1 per cent of the eccu population is active on the rgsm. to put this in people terms, only about 350 persons are current investors in this market. when this low level of usage is juxtaposed with the longstanding situation of excess liquidity in our banking system, we cannot help but conclude that there is considerable scope to grow this market. ongoing support for debt management we wish to record our gratitude to the government of canada for its sterling support of debt management in the eccu through the funding of the debt management and advisory services project. we have seen the benefits of the capacity building efforts of this project across the eccu. it is now incumbent on the participating governments and the eccb to build upon this solid foundation and create a legacy of professional debt management. for its part, the eccb remains fully committed to support member countries through capacity building in the following areas : a ) debt recording and management ; b ) debt sustainability analyses ; page 2 of 3 eastern caribbean central bank c ) debt management strategies ; and d ) investor relations management. before i conclude my brief remarks, i should like to touch on two decisions of the monetary council. first is the decision that all member countries should seek to attain a public sector debt to gdp ratio of 60 per cent by 2030. we note the progress made by member countries. in 2014, debt to gdp for the eccu stood at 80. 2 per cent. at the end of 2018, the ratio had fallen to 68. 5 per cent. while several countries remain above the ratio, we are encouraged that the debt trajectory is on the right path.