BIS Annual Report 2011/2012: "BIS Annual Report 2011/2012 24 June 2012 The global economy has yet to overcome the legacies of the financial crisis to achieve balanced, self-sustaining growth."
Excerpts:
Chapter I: Breaking the vicious cycles
The global economy has yet to overcome the legacies of the financial crisis to achieve balanced, self-sustaining growth. In different ways, vicious cycles are hindering the transition for both the advanced and emerging market economies. . .
Chapter II: The year in retrospect
In the advanced economies, the first months of 2011 seemed to offer the beginnings of a self-sustaining recovery, a promise that turned out to be a false dawn. The pattern appears to be repeating itself in 2012, with early signs of strength gradually fading. . .
Chapter III: Rebalancing growth
Both advanced and emerging market economies face structural challenges. Sectoral misallocations that built up during the boom, coupled with high levels of household and corporate debt, continue to hobble growth in some advanced economies. These countries must move to repair balance sheets as they facilitate the rebalancing of resources across sectors. . .
Chapter IV: The limits of monetary policy
. . . Central banks have had little choice but to maintain monetary ease because governments have failed to quickly and comprehensively address structural impediments to growth. But the need for prolonged accommodation has to be carefully weighed against the risk of generating distortions that will later produce financial and price instability.
Chapter V: Restoring fiscal sustainability
. . . . Restoring the supply of risk-free assets requires that governments convincingly address high deficits as well as projected increases in their long-term liabilities. Some countries need to take immediate action to significantly reform their public sectors and remove structural impediments to growth. All countries need to prevent adverse feedback loops between the financial sector and the sovereign and build up fiscal buffers in good times.
Chapter VI: Post-crisis evolution of the banking sector
Banks and prudential authorities still face tough challenges in securing financial stability. Banks need to further strengthen capital and liquidity positions to regain markets' confidence. To expedite this process, authorities should ensure that institutions recapitalise and recognise losses on problematic investments. . . .
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