10-year Government bonds  Jul-10  Source: Reuters EcoWin  Basis spread Difference between the interbank rate and the expected policy rate Basis points 400  400 Euro area  350  350  USA  300  300  250  250  200  200  150  150  100  100  50  50  0 Jan-07  Jul-07  Jan-08  Jul-08  Jan-09  Jul-09  Jan-10  Jul-10  0 Jan-11  Sources: Reuters EcoWin and the Riksbank  CDS premiums for the banks 1100 1000 900 800 700 600  1100 Alpha Bank (GR) Banco espirito (PT) Banco Commercial (PT) Caxia geral de Depositos (PT) Banca M onte dei Paschi di Siena (IT) Intesa Sanpaolo (IT) Santander (SPA) Banco Bilbao (SPA)  1000 900 800 700 600  500  500  400  400  300  300  200  200  100  100  0 Jul-09  0 Sep-09  Nov-09  Jan-10  M ar-10  M ay-10  Jul-10  Source: Reuters EcoWin  12  BIS Review 109/2010  GDP growth Annual percentage change 6  6  4  4  2  2  0  0  -2  -2  -4  -4  -6  -6 00  01  02  03  04  05  06  07  08  09  10  11  12  Source: Statistics Sweden  GDP per quarter Quarterly percentage change, seasonally adjusted 2  2  1  1  0  0  -1  -1  -2  -2  -3  -3  -4  -4  -5  -5 08  09  10  Source: Statistics Sweden  Economic Tendency Survey Index, average = 100, standard deviation = 10 115  115  110  110  105  105  100  100  95  95  90  90  85  85 80  80 The Economic Tendency Indicator M ean +/ - one standard deviation  75  75 70  70 00  01  02  03  04  05  06  07  08  09  10  Source: National Institute of Economic Research  BIS Review 109/2010  13  Purchasing managers’ index Index above 50 indicates growth 70  70  65  65  60  60  55  55  50  50  45  45 40  40 Euro area Sweden USA  35  35 30  30 00  01  02  03  04  05  06  07  08  09  10  Sources: Institute for Supply M anagement, M arkit Economics and Swedbank  Industrial and services production Index, 2005 = 100, seasonally-adjusted data 130  130 Industrial production  120  120  Production of services  110  110  100  100  90  90  80  80  70  70 60  60 00  01  02  03  04  05  06  07  08  09  10  Source: Statistics Sweden  Labour and employment Thousand persons,15-74 years, seasonally-adjusted data 5200  5200 Employed Labour force  5000  5000  4800  4800  4600  4600  4400  4400  4200  4200 01  02  03  04  05  06  07  08  09  10  11  12  13  Sources: Statistics Sweden and the Riksbank  14  BIS Review 109/2010  Unemployment Per cent of the labour force, 15-74 years, seasonally-adjusted data 10  10  8  8  6  6  4  4  2  2  0  0 01  02  03  04  05  06  07  08  09  10  11  12  13  Sources: Statistics Sweden and the Riksbank  Inflation Annual percentage change 5  5 CPI CPIF  4  4  3  3  2  2  1  1  0  0  -1  -1  -2  -2 00  01  02  03  04  05  06  07  08  09  10  11  12  13  Sources: Statistics Sweden and the Riksbank  Inflation and inflation expectations Annual percentage change, all agents 5  5 Inflation expectations 5 years ahead CPI  4  4  3  3  2  2  1  1  0  0  -1  -1  -2  -2 00  01  02  03  04  05  06  07  08  09  10  Sources: TNS SIFO Prospera and Statistics Sweden  BIS Review 109/2010  15  Repo rate Per cent, daily data respectively quarterly averages 5.0  5.0  4.5  4.5  4.0  4.0  3.5  3.5  3.0  3.0  2.5  2.5  2.0  2.0  1.5  1.5  1.0  1.0  July  0.5  0.5  April  0.0  0.0 00  01  02  03  04  05  06  07  08  09  10  11  12  13  Source: The Riksbank  Note.

Jaime Caruana: Reform of the international standard for bank capital Notes for the testimony by Mr Jaime Caruana, Governor of the Bank of Spain and Chairman of the Basel Committee on Banking Supervision, before the Committee on Economic and Monetary Affairs, European Parliament, Brussels, 18 January 2005. * 1. *  *  Introduction  I am honoured to appear before the Committee on Economic and Monetary Affairs today to discuss the reform of the international standard for bank capital. In past years, members of the European Parliament have kindly welcomed Bill McDonough, the prior Chairman of the Basel Committee, as well as other Basel Committee representatives. I would like to thank you for giving me this opportunity to contribute to the debate and to support your important work in considering the proposed directive on capital adequacy requirements for banks and investment firms. These hearings are extremely valuable and represent a vital stage in the European legislative process, where the European Parliament has a crucial role. I will be speaking today in my capacity as Chair of the Basel Committee. But I hope you will allow me to digress on one or two occasions to supplement my remarks with my perspectives as Governor of the Banco de España. The Banco de España is a central bank and banking supervisory authority within the European Union; it will therefore be a direct subject of the legislation that is enacted on capital adequacy.