That could potentially create some turmoil for international markets including ours and in the process we could see some potential for dislocation which is why Sri Lanka has decided to reach out to multilateral agencies like the IMF and the World Bank to assist us in terms of sheltering or protecting the economy against any adverse developments that may occur in the near future as a consequence of any turmoil in international capital markets if and when US policy makers decide to raise interest rates. That is one hurdle we have to look at. The second hurdle I would say is the lack of a structural change the way international, particularly developed countries of the world, are managing their economic affairs. A lot of the changes that we have seen in the last 5 years has had to do with monetary policy and the aggressive easing of the monetary policy. But on the fiscal side, you haven’t seen any structural changes in countries like the United States and most European countries that took the world into the great recession in 2008 as a consequence of their housing  2  BIS central bankers’ speeches  bubbles. That structural change in terms of improving productivity, reducing the size of social security programs and retooling their economies to become more productive has still not started and until that happens we don’t have a sustainable basis for global growth to grow apace.
Therefore, legislative action in targeted areas is warranted. While bold action towards the completion of the single rulebook for capital markets will be beneficial, a gradual approach to harmonization could be envisaged in those areas where political sensitivities prevent action at EU level in the short term. 4. Sufficient attention should be devoted to safeguarding financial stability, such as in the area of shadow banking. 5. A single rulebook for EU capital markets needs to be complemented with strengthened supervisory convergence, delivering a common implementation and enforcement of rules. 6. Further reducing still existing fragmentation in financial market infrastructures should be at the core of CMU. It needs to be recognized that banks will continue to play an important role for the financing of the real economy and in providing access to capital markets. BIS central bankers’ speeches  1