20 This compares to the 40% of US mortgages that were issued without full documentation of borrowers’ income in 2006. 11  All speeches are available online at www.bankofengland.co.uk/speeches  11  incentives between originators and holders. It is regrettable that this requirement has been rolled back in the US, where 85% of Collateralised Loan Obligations (CLOs) are originated.21 Most fundamentally, the main holders of leveraged loans can generally bear the risks. There is no analogue to the thinly capitalised Structured Investment Vehicles (SIVs) who issued short-term commercial paper to hold long-term illiquid sub-prime debt in the run up to the crisis. For CLOs, the riskiest tranches are concentrated in hedge funds, open-ended funds, structured credit funds and CLO managers (Chart 9). US banks and insurers own around one third of CLOs (usually the less risky tranches) compared to only 6% for European firms and 2% for UK firms. Chart 9: Estimated holdings of CLOs by global investors  Sources: BarclayHedge, Bloomberg Finance L.P., FCA Alternative Investment Fund Managers Directive (AIFMD), Firm public disclosures, LCD, an offering of S&P Global Market Intelligence, Morningstar, National Association of Insurance Commissioners, Securities Industry and Financial Markets Association, Solvency II submissions, and Bank calculations. Notes: Indicative estimated holdings of CLOs by global investors. 1 square = 1% of $ billion global CLO market. For further detail, see footnotes to Chart F. 8 in the November 2018 Financial Stability Report.
According to various estimates, about 5% people at working age have already left Poland. For Estonia, this figure stands at as much as 10%. In the global economy of the 21st century, technological progress and lower transportation costs have allowed for the business processes or their parts to be easily moved between countries (a phenomenon frequently described as business process offshoring). The relative role of crucial factors behind long-term development prospects is thus changing. In the 21st century, the key factor conducive to economic growth will be knowledge – broadly understood as a country’s intellectual capital – and this country’s ability to drive innovation. If businesses in a given country fail to change their product and service profiles to achieve greater value added, they will find themselves pushed out of the market by companies from countries with low manufacturing costs. This applies to a number of markets, products and services only recently considered as subject to the international competition, one glaring example being the off-shoring of services offered by radiologists from the US to India 6 . China has already become the world’s leading exporter of computers and their components or telecommunications equipment 7 . I believe that it is just a matter of less than twenty years for China to achieve a similar position in the automotive industry, mainly because Chinese companies have mastered network-based cooperation.