UK banks, in particular, have sizeable direct investments in the US and large cross-border exposures to US banks and corporates. Cross-border exposures to US non-bank borrowers stand at around $ bn, more than 50% higher than the equivalent exposures to the rest of Europe, while the total exposure of UK banks to the US amounts to $ bn, or 8% of UK GDP. Close ties in financial markets parallel the strong links in other sectors. Whether it is Grand Met seizing the Pilsbury Doughboy or Ford making off with Jaguar and Aston Martin, there has been a significant and increasing flow of direct investment in both directions across the Atlantic. The close correlation between movements in the FTSE and Dow is testament to the links between the US and UK corporate sectors. Given the strength of these ties, UK banks and investors are inevitably vulnerable to a US slowdown. The scale of UK exposures to the US helps to give some dimension to the scale of this risk. An analysis based on the market ratings of borrowers suggests that the statistically expected annual losses on UK bank's exposures to the US are likely to be around $ or about 1% of UK exposure. In principle, banks should have fully anticipated these losses in their loan pricing and general provisioning. But bank capital is there primarily to absorb unexpected losses, for example the consequences of an unexpectedly deep US recession.
After the end of our net asset purchases, the primary instrument to steer our monetary policy stance is again our key interest rates. And as far as their path is concerned, we continue to expect them to remain at their present levels at least through the summer of 2019, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2% over the medium term. This rotation of instruments from net purchases to the rate path has been implemented in such a way as to preserve our accommodative monetary policy stance. We have thus not tightened our monetary policy. Moreover, we have made it clear that, in any event, we stand ready to adjust all of our instruments, as appropriate, to ensure that inflation continues to move towards our inflation aim in a sustained manner. President Mario Draghi always stresses that the toolbox is full. But with interest rates at or even below zero and the asset purchase programme at its self-imposed limits, what else is really left? If there is a problem, there needs to be a careful assessment to establish the cause. A financial shock, for instance, is something different from a slowdown in growth for fundamental reasons. In the case of an economic slowdown, interest rates are generally the instrument of choice. If the euro area economy were to slow more sharply, we could adapt our forward guidance on interest rates and this could be complemented by other measures.