On the supply side, as the world economy recovers, the balance of production will continue gradually to shift towards exporters and towards firms which, given sterling’s large depreciation since mid-2007, can now compete somewhat more readily against importers. For sectors primarily serving domestic markets, the adjustment is more challenging. Some face both higher costs for imported inputs to production and weaker demand – not just temporarily but persistently – for their final output. On the ugly side of this rebalancing, there has already been an increase in vacant properties on the high street, which is also facing structural change due to on-line shopping. Some of those properties will no doubt be converted to other uses over time, but I know it will not be easy for the firms affected or for their employees. Company insolvencies have ticked up, and will likely continue to do so for a while. Credit supply and the corporate sector Recovery will come, and the necessary adjustments will occur, over time. But it is made harder for you by the problems in the financial system. You have faced first tightening, then in late 2008 frozen, and now a prolonged period of tight credit conditions. Many of you must have worried at times about the safety of your cash balances and other liquid investments. You will have wondered about the soundness of the counterparties you use in the capital markets.
It must also be expected that there will be strong focus on liquidity risk by financial institutions and supervisory authorities, and not least in the work on international regulations in the period ahead. Thank you for your attention. BIS Review 100/2007  7  8  BIS Review 100/2007  BIS Review 100/2007  9  10  BIS Review 100/2007  BIS Review 100/2007  11  12  BIS Review 100/2007  BIS Review 100/2007  13  14  BIS Review 100/2007  BIS Review 100/2007  15  16  BIS Review 100/2007  BIS Review 100/2007  17