some flexibility to production and working arrangements. on one hand, the increase in the immigrant population has sustained the thrust of domestic spending, while on the other, the resulting greater supply of labour has increased the spanish economy's productive capacity, enabling increases in output more closely tailored to the buoyancy of demand to be attained. furthermore, the presence of this additional labour – which has a comparatively higher degree of mobility – has contributed to restricting potential sectoral bottlenecks and the wage pressures that usually characterise situations of notably vigorous expenditure, such as that seen in recent years. the composition of growth in 2005 evidenced few changes in relation to previous years, in step with the continuity of the impulses received by the economy. indeed, the growth pattern became slightly more unbalanced, as national demand grew by 5. 1 %, outpacing the related increase in 2004, while foreign trade gave rise once again to a substantial negative contribution to gdp growth. household consumption and housing - related spending continued to be the main underpinning of the increase in demand, supported in turn by the sound growth of disposable income and of employment, and by the generosity of financial conditions in the economy. as a result, households continued to reduce their saving ratio and to increase their net demand for financing. the principal new development in 2005 was the marked recovery in corporate productive investment expenditure, which focused particularly on the acquisition of capital goods. this pick - up was accompanied by a strong increase in credit, favoured by accessible financing conditions. credit was directed especially at small – and in principle more dynamic – companies, and it spread to all sectors of the economy, including manufacturing industry. public - sector demand also quickened last year, driven by the rise in investment that characterises the initial years of a legislature and by the increase in government consumption. as stated, the unbalanced features of this growth pattern were manifest again in 2005, especially in the behaviour of the external sector. flat goods exports, despite the burgeoning growth of foreign markets, combined with a fresh and significant increase in imports to give rise to a further deterioration in the negative contribution of net external demand, which had already been very marked in 2004. a mix of factors was involved here : first, the increase in the energy bill and the greater buoyancy of demand in spain compared with its eu neighbours, which partly reflects spain ’ s different cyclical position ; and further, the losses in competitiveness that have built up in recent years

29. 11. 18 opening remarks 2nd annual meeting cebra international finance and macroeconomic program pablo hernandez de cos governor ladies and gentlemen, it is a great pleasure for me to welcome you all to the second annual meeting of the cebra ( central bank research association ) international finance and macroeconomics program, hosted by the banco de espana. let me first thank our colleagues from cebra for their efforts in co - organising this conference. cebra is an association that seeks to encourage applied and theoretical research on relevant topics for central banks, among other institutions. its research programmes foster interaction among researchers at central banks and in academia. in this vein, the international finance and macroeconomics program ( ifm ) led by galina hale provides an excellent forum to discuss key policy questions that are also relevant to academia. the title of this conference is : “ risk, volatility and central bank policies ”. allow me to briefly share with you – from a central banker ’ s perspective – some of our current concerns in relation to the three items highlighted in this title. starting with risks, in recent months some institutions – including the banco de espana through its financial stability report – have stressed that, although the financial stability environment remains favourable, global near - term risks have increased or have begun to materialise. in recent years the global economy has experienced a period of sustained and across - theboard growth, supported by unprecedented expansionary and unconventional monetary policies around the world. but this context has also been conducive to the accumulation of certain financial vulnerabilities. in particular, it has led to a “ search for yield ” by investors who have been seeking more profitable and riskier investments. this is evidenced at least by three facts : increasing leverage, the high share of debt at risk and the relatively high valuations of certain assets. now the current phase of ultra - loose monetary policy is coming to an end. in the us, after seven years of interest rates around the zero lower bound, monetary policy is being normalised. other advanced economies, such as the uk or canada, have also started to raise interest rates. regarding the euro area, the ecb governing council anticipates that, subject to incoming data confirming the medium - term inflation outlook, net asset purchases will come to an end in december 2018. in this context, two main developments in international financial markets warrant attention as, in my view, they might currently pose key threats to financial stability and global growth. first