These factors include the extraordinary level of liquidity that’s been provided, access to IOER that is limited to depository institutions, and a number of international and domestic regulatory reforms. International regulatory reforms include the liquidity coverage ratio, leverage ratio, and net stable funding ratio. In the U.S., changes in deposit insurance premium calculations, rules governing money market mutual funds, and the potential for a capital surcharge based in part on short-term wholesale funding may also affect certain market participants. Many of the changes in regulation – along with changes in market structure, technology, and other factors – may affect market participants’ activity and relationships in money markets. On net, their balance sheet costs may be higher, which may prompt money market participants to require higher returns to engage in competition to arbitrage wedges in money market rates and to alter their participation in central bank operations and facilities. This outcome may affect the transmission of monetary policy or require central banks to adapt their operations to accommodate these realities. Conclusion In conclusion, I’d like to note that the framework for implementing monetary policy and the landscape in which we operate have seen important changes in the years since the crisis,  8  BIS central bankers’ speeches  and they continue to evolve. The Desk plays an important role in this process, carrying out open market operations at the direction of the FOMC, in pursuit of the operating objectives the FOMC deems appropriate to achieve its dual mandate of maximum employment and price stability.
Despite fair growth prospects and subdued vulnerabilities, medium-term growth potential in the region seems insufficient to ensure pre-crisis pace of real convergence. The most recent data shows that the convergence is still there, but it has markedly slowed down. At the current pace, many countries in the region would need decades to reach German, Austrian or Swedish levels of income, countries that we like to use as benchmarks. The last crisis also showed that there can be events that will hold back growth and convergence for a protracted period of time and even work in an opposite direction, leading to divergence. We know that when it comes to living standards, in the long-run it is all about labour productivity, which can be decomposed into growth of capital per worker and growth of total factor productivity (TFP). While we can expect an investments to continue growing, it is not likely that the rates that we have witnessed in 2000s, with strong inflow of FDIs and related transfers of technology and know-how, will be seen again in the near future. That is why the TFP will ultimately prove to be the major determinant of longterm convergence. For us as policy makers, understanding the determinants of technology adoption, the TFP growth, is the key, as this gives us the channel to act through. There is an increasing number of theories and empirical papers linking development and the adoption of technologies to the role of institutions defined in a very broad way.