world trade volume and consumer prices in advanced economies are also projected to decline. the world bank, in its global economic prospects report, january 2015, has reduced global growth projection for 2015 from 3. 4 per cent to 3. 0 per cent. japan has come out of a technical recession but is still quite some distance away from the bank of japan ’ s target of 2 per cent inflation. the bank of canada and the reserve bank of australia have announced rate cuts in view of weak growth. global growth, therefore, continues to be in a sluggish phase, which has been characterized as “ secular stagnation ” by larry summers. 2 the us offers the best prospects in the developed world but eurozone continues to be a matter of concern even as the european central bank embarks on quantitative easing ( qe ) programme to fight deflation. greece continues to trigger fears of a renewed eurozone crisis though the european finance ministers appear to have reached an agreement to extend greece ’ s financial rescue plan for imf world economic outlook update, january 2015. u. s. economic prospects : secular stagnation, hysteresis, and the zero lower bound : larry summers. bis central bankers ’ speeches another four months. the possibility of a grexit, however remote, may induce a chain of events which markets may not be prepared for. ukraine and the middle east are sources of geopolitical risks. given the prospects in the us economy, the us dollar has strengthened against most currencies and, in particular, against the euro, canadian dollar, australian dollar and the japanese yen. with a stronger us dollar and low oil prices, what is of interest is the policy course the us federal reserve is likely to pursue – when it will take the first step in a cycle of rate rise and, subsequently, at what pace will it tighten monetary conditions. emerging market & developing economies 3. the recent update on the imf world economic outlook projects that growth in emerging markets & developing economies ( emdes ) to remain broadly stable at 4. 3 per cent in 2015 and to increase to 4. 7 per cent in 2016 – a weaker pace than forecast in october 2014. projection for growth of indian economy was marginally revised downward from 6. 4 per cent to 6. 3 per cent. the world bank, in its global economic prospects report ( january 2015 ) has also cut down the growth projection of emdes from 5. 2 per cent to 4. 8 per cent for the year

foreign exchange transactions are bilaterally negotiated, they are cleared and settled through ccil. today cdss prices / spreads are by far the most closely monitored early warning signals for real time changes in credit risk of an entity whether private or sovereign. this is because cdss make it possible to back out an implied credit price even when one is not discovered in the underlying cash market instruments like bonds or loans. thus, cds market has tremendous practical application as a reliable diagnostic tool in stress - testing for supervisors and regulators. besides, a cds market will also enable efficient hedging and trading of credit risk and synergise development of active and liquid corporate bond and repo markets. like equity, credit risk subsumes all other risks as it is a function of forex risk, interest rate risk, leverage risk, liquidity risk, governance risk and that is why cdss and equity prices are, in equilibrium, almost perfectly negatively correlated. as is invariably the case with any major crisis, the ongoing global financial crisis has unleashed a passionate debate over the design of a new global financial architecture. the opinion on overarching role in global financial surveillance is sharply divided between assigning it to financial stability forum, on the one hand, and to imf, on the other. however, the trouble has been not so much with the existing, inter - temporally evolved, global financial architecture as really with how it was actually worked in practice. recent huge losses at global banks running to about usd 1 trillion are not because existing best practices failed but because those responsible for implementing and enforcing them failed them! after all, of all risks to regulators and regulatees alike, human resources risk is by far the most serious as it is the source of all risks as confirmed by the ongoing financial cataclysm. the crux of the matter is what we need is not more or less regulation and governance but good regulation and governance. this has been the undoing of both regulators / supervisors and financial firms / banks alike. in the way of example, in the usa, the traditionally very healthy aaa rated mono - line bond insurers mbia and ambac changed their business model from insuring only their staple municipal bonds to insuring cdos and abs. while this went unnoticed by insurance regulators, pershing square, a hedge fund, spotted trouble and started shorting both equity and credit risk of these two companies. but even after this, regulators failed to take notice and corrective action with the