BIS central bankers’ speeches  1  to address the distortions and constraints could in practice result in short-term costs, in particular if local circumstances are not well understood. If however approached judiciously, it should yield positive results over the medium to longer term. It was against this background that Hausmann, Rodrik and Velasco developed their approach to identifying binding constraints to growth.
It is important that such vehicles be developed soon or there is a risk of funds leaving the region. Fortunately, international interest rates are low so this is not an immediate  BIS Review 32/2004  1  risk but it looms on the horizon as a possibility if we are unable to deploy excess funds before international interest rates rise.