Likewise, as I have mentioned on numerous occasions since the onset of the pandemic, the financial vulnerability of some business segments has increased, especially in the activities hit hardest by the crisis and in smaller firms. In the case of households, the increase in the saving rate and the reduction in debt at aggregate level mask the existence of segments that have seen their financial fragility increase. These vulnerabilities could also lead to future rises in default rates. 7  The businesses benefiting from the guarantee programme had a lower equity-to-assets ratio, a higher average cost of debt, a lower level of sales productivity (measured as sales to employees) and shorter bank debt maturities (see Box 2.1, Financial Stability Report, Spring 2021). 8 See Box 2.2, Financial Stability Report, Spring 2021. 8  A second significant aspect is the heterogeneity in the impact of the crisis on the banking sector, stemming from the different starting positions in terms of solvency and balance sheet quality, but also from a heterogeneous exposure to the countries, sectors and firms most affected by the crisis. These differences are reflected in the mixed performance of profitability at banks in 2020. In particular, extraordinary factors aside, the impact of the crisis has widened the dispersion range of profitability among banks. The differences between banks appear to owe less to a differing exposure to the sectors hit hardest by the pandemic,9 which is relatively homogeneous, than to the dispersion in terms of exposure to SMEs.
4  BIS Review 124/2006  Chinese authorities that the central bank should be more open-minded about cooperating with the government institutions in managing huge reserve assets). So, ceteris paribus, this factor will imply balance of risks skewed towards further risk premia compression in emerging markets in situation when US growth slows and expected returns in developed markets drop amid poor growth outlook. The important question is how it will end? Temporary US growth slowdown is unlikely to solve global imbalances issue, it is unlikely that oil-exporting countries will accelerate further their investment in real estate, as the pace is already frantic, lack of reforms in the eurozone indicates that potential output in this part of the world is unlikely to speed up significantly. So standard, consensus prescriptions will not work. The only feasible channel that might work is accelerating the pace of financial sector development, particularly in emerging markets, to produce more financial assets and more collateral. These reforms are easier to implement, because they do not require taking away social benefits and they do not hit any specific groups of interests. So it appears that the discussion should shift away from overvaluation of renminbi, and from implications of pegging gulf currencies to the weakening dollar, towards ways of speeding up necessary financial markets reforms in saving-abundant countries. If these reforms gain speed, we may be able to solve global imbalances problem without much global pain.