Over the longer term, the instability, whether inherent or not, would decline if we have more developed financial and capital markets and also, by default, a multi-currency system as they reduce the risk concentration on one individual financial market and currency. Conclusion In closing, I believe that policymakers over the world need to focus our effort on all aspects of policy challenges in parallel including surveillance, financial market developments, regulations, and risk management. I strongly believe that market players respond to policy incentives and therefore policymakers have the responsibility to put the right policy and incentives in place. There is no quick fix and it will take a long time and painful adjustment before countries that were at the epicenter of the global crisis can resume normalcy. In Asia, we have taken a decade to strengthen our economic resilience. Because of our past efforts, we have been able to weather this crisis relatively well. That said, our work in Asia is still ongoing to strengthen the policy framework and tools to deal with future crisis that will surely not be the same as the last. Importantly, we are mindful that the world will have much less fiscal space to cushion potential global contraction, should the next crisis hit. While it may be easier to advance these efforts at the national level, achieving policy coordination on the global level will be much more difficult.
6  Admittedly, some new technological developments (such as digitalisation, robotics and artificial intelligence) could be a source of faster productivity growth. And plausibly, population ageing may actually promote automation. But eventually automation can only progress insofar as new ideas (so-called product innovation) emerge. Whatever the net effect on productivity, with the evidence we now have on the association between demography and growth in advanced economies in recent decades, we should not rule out the possibility that population ageing might significantly decrease potential output growth. Given population projections, extrapolating the observed association into the coming decades yields declines of output growth of about 1 percentage point (pp) until 2030, and close to 2 pp in countries where the demographic transition will accelerate in the years ahead. And recent observations on productivity growth are not very encouraging. Whatever the measurement used (either labour productivity or total factor productivity) there is a clear productivity slowdown in most advanced economies during the last two decades, even though total factor productivity growth has recovered somewhat in the last one. There is some discussion about to what extent this global productivity trend is due either to missmeasurement, to the delay in the diffusion of the new technologies and of their potential effects, or to more fundamental reasons, such as a slower innovation rate. Nevertheless, we cannot take for granted that productivity growth could compensate for the negative effects of population ageing on potential growth. 7  Population ageing may also affect trend inflation.