See the notes to Chart 2 for how excess current account balances are calculated. And since all countries cannot become more competitive at the same time – it is a relative concept – there is no avoiding it: higher global growth will require comprehensive measures to boost productivity and with it, real wages and demand. This means domestic policies to spur innovation, technology adoption, and the reallocation of resources. Particularly important will be measures to re-start the stalled ‘diffusion machine’. 18  While the most productive  companies have continued to innovate, others have become slower at adopting those innovations. Speeding up the rate of take-up of new inventions and processes – for example through greater product market competition or challenges to management to benchmark against best practice  19  – would provide a  significant boost to overall productivity growth. And higher growth requires a new approach to trade policy. Consider that Bank of England research estimates that up to one half of the post-crisis productivity slowdown could be related to the deceleration in global trade growth. 20  It will not be enough for the G20 to “resist protectionism.” The G20 now needs to make “trade work for all.” That includes using e-commerce platforms to promote free trade for SMEs across the G20,  21  and it requires  an urgent and critical examination of trade in services. 18  See https://www.oecd.org/eco/growth/OECD-2015-The-future-of-productivity-book.pdf.
The Bank of England also must concern itself with the resilience of CCPs in other European and non-European jurisdictions that are used by firms that we supervise. These CCPs must be subject to robust regulatory standards and deep reciprocal supervisory cooperation. To address such issues, we can and should build on current models to develop a new form of regulatory and supervisory cooperation. The European Commission’s proposals announced last week recognise the importance of effective cooperation arrangements between the relevant EU authorities and their overseas counterparts. They include potential provisions for deference to the rules to which a CCP is subject in its home jurisdiction in line with the intent of the G20. 26  The Bank welcomes this. The Commission’s proposals, driven in part by Brexit, address an increasingly important and more general issue in the regulation of the international financial system. 25  Requiring up to another € of capital. See, for example, the G20 Leaders’ communique, Brisbane Summit, 16 November 2014, available at http://www.g20australia.org/official_resources/g20_leaders_communique_brisbane_summit_november_2014.html. 26  12  All speeches are available online at www.bankofengland.co.uk/speeches  12  Elements of these proposals could therefore provide a foundation on which to build robust cross-border arrangements for the supervision of CCPs. This should be based on deep cooperation between jurisdictions and authorities who defer to each other’s regimes where they meet international standards and deliver similar outcomes.