The expression “nothing is as practical as a good theory” probably applies in many ways, but to be really practical also requires that the theory captures the central elements as they appear in real life and – in particular – that one is aware of its shortcomings and faults. Measurement and estimation problems make the step from theory to practice difficult… One circumstance that very much complicates the step from theory to practice is that while the variables in the loss function are well specified in theory, in practice it is far from obvious how they should be measured. Resource utilisation, y-y*, can be regarded as a summarising measure of developments in the real economy and states how far production resources, that is, labour and real capital, are used in relation to the level that is sustainable in the long run, or the “normal” level. Unfortunately, it is not possible to directly observe how high the level of resource utilisation in the economy is, and nor is there any generally-accepted view of how this should be calculated. It is thus scarcely possible to say that a particular policy will lead to resource utilisation increasing or decreasing by exactly this or that figure.17 Sometimes the argument is put forward that it is much easier if one uses the deviation between actual unemployment and long-run sustainable unemployment, or equilibrium unemployment, instead of resource utilisation in the loss function. But I am quite sure that  14  Svensson, Lars E.O.
It is true that the past, global financial centres emerged in jurisdictions with huge trade surpluses: Amsterdam in the 16th century, London in the 19th century New York in the early 20th. But London’s re-emergence 60 years ago was long after the global economic dominance of the UK – and long before the single market in financial services developed in the EU. Openness, time zone, language, law, developed domestic financial markets and, crucially, the concentration of skills and expertise and talent, seem better explanations of the agglomerations of economic activity that are today’s global financial centres.3 The EU has the ambition to build a more integrated and more market based financial system – the Capital Markets Union. I certainly believe this is the right ambition; a greater role for risk capital and for market based rather than bank-based finance will help to diversify risk across borders, reduce costs to the real economy and avoid too great a reliance on the banking channel of credit intermediation. BIS (2019): UK’s share of global 2019 (April) turnover in OTC interest rate derivatives and foreign exchange UK’s FinTech adoption rate was 71% in 2019, global average is 64 3 Roberts, R. (2005). London as an international financial centre, 1980-2000: global powerhouse or Wimbledon EC2?. In: Cassis, Youssef and Bussière, Eric (eds.) London and Paris as International Financial Centres in the Twentieth Century. Oxford University Press, Oxford, pp. 287-312. ISBN 9780199269495. Wójcik, D., Knight, E., & Pažitka, V. (2018). What turns cities into international financial centres?