Two aspects have so far been central here, one of which relates to the pressure that a fiscally weak sovereign places on the funding costs of its home banks; the other to pressures that can be placed on banks in other jurisdictions who have or are thought to have, exposures to those sovereigns.
For example, making judgments with regard to what effects technological innovation is having on productivity in the overall economy, in other words, the potential growth rate, is crucial in assessing the tightness of supply and demand conditions, the so-called output gap. Let me take an example to illustrate this point.