To elaborate, overseas economies – mainly the advanced economies – are expected to gradually pick up. Emerging economies other than China and commodity-exporting economies, some of which are exhibiting weakness, will likely continue to lack growth momentum for the time being. However, from a somewhat long-term perspective, their growth rates are likely to start picking up again with an improvement in the advanced economies.
And, most certainly, there was no need for the recent financial market turmoil to drive home that point. I have chosen two topical questions to guide me in my following remarks: First, what are the underlying causes of the recent financial market turmoil? Second, how can central banks help avoid disturbances in the financial system?