a country claiming to be unable to pay its debts will need something more than its own word to convince the international community that it is not unnecessarily defaulting on its debts. the second element is that you need some method of “ closing the door ” - ensuring that, once the bankruptcy has been declared, no creditors get any preferential treatment, but instead “ sit around the table ” to work out a fair division of the assets which remain. one way of moving forward on this issue is to confine and define the issue more specifically. if we were to take the asian crisis as our benchmark, then the most important element is to bail - in the bank - to - bank debt. why is this the proper focus of attention? the short answer is that most other types of debt were resolved in ways that may not be satisfactory, but at least did not exacerbate the crisis greatly. sovereign - to - sovereign debt has an existing forum of resolution - the paris club. debt of non - bank borrowers - to a considerable degree - experienced a de facto stand - still and at least did not exacerbate the outflows ( although it had big effects in harming confidence and needs to be resolved if normal business relations are to be restored ). this left the bank - to - bank outflows as the principal problem - the us $ 70 billion of outflows mentioned earlier. domestic banks had the local - currency liquidity to make the repayment because they were guaranteed by the government. while ever the foreign exchange markets were open, therefore, they were in a position to repay. the issue cannot be resolved simply by removing bank guarantees : no government, anywhere, will stand idly by while a systemic problem destroys its banking system, so absence of guarantees ( no matter how vigorously asserted ) is simply not credible. the asian crisis gave us an example of the sort of thing that might be done - the korean bank rescheduling of december 1997 / january 1998. this had the two necessary elements - “ blowing the whistle ” and “ closing the doors ”. the blowing of the whistle took place when foreign exchange reserves were, essentially, exhausted. the closing of the doors took place in a very low - key way : there was no formal declaration of any capital controls, but the korean banks could obtain foreign exchange only by going to the central bank, so the central bank could strengthen the banks ’ bargaining position vis - a - vis the creditors

to the medium - term global outlook facing the farming sector. and here the news is more positive. in short, farming is benefiting from some of the same underlying forces that have led to an improvement in the outlook for the mining sector : namely, the development of asia and the steady rise in incomes of the many hundreds of millions of people who live on the asian continent. as incomes rise, especially from low levels, food consumption tends to increase, and the increase is concentrated in food with relatively high value added. there is also growing demand for agricultural products for energy production. and this increase in demand is occurring at a time when global growth in agricultural productivity has been slow by the standards of previous decades. this changing balance in global demand and supply can be seen in the global prices for agricultural goods, which have increased significantly. as one example, the imf ’ s global food price index has almost doubled over the past decade, after trending lower in the 1980s and 1990s ( graph 1 ). while after adjusting for overall inflation, food prices are still just below their average over the twentieth century, the downward trend evident over most of the past 100 years appears to have stopped. and looking forward, there are reasonable prospects that higher prices are not just a temporary development. for example, in its latest review of world agriculture, the oecd is predicting that prices of a wide range of products over the next decade will be 20 to 30 per cent higher than their average over the past decade ( after adjusting for inflation ). 1 the higher prices of agricultural commodities – together with their greater volatility – have attracted the attention of policymakers around the world. just last week, the g20 issued a comprehensive report looking at the reasons for these developments. its central conclusion is that “ marked shifts in the physical supply - demand balance … have been the main driver of see oecd - fao ( organisation for economic co - operation and development and the food and agriculture organization of the united nations ) ( 2011 ), oecd - fao agricultural outlook 2011 – 2020, oecd publishing, paris. bis central bankers ’ speeches the price fluctuations over the past ten years ” and that “ for many commodities, the expansion of supply has fallen short of buoyant demand ”. 2 graph 1 this buoyant demand for agricultural commodities is underpinned by rising food consumption per capita as incomes rise, particularly in asia ( graph 2 ). since the early 1960s, the number of ki