•  As for the CDS vicious circle (see chart 3) some banks with no exposure to subprime saw a sharp rise of the spread of their traded CDS from 30 basis points in July 2007 to 700 basis points during the recent turbulences. This is mainly due to a pronounced increase of doubts and uncertainties.
Concerning the share allocation rule for the IBRD selective capital increase (SCI), we believe ad hoc solutions and arbitrary thresholds should be avoided as much as possible. We agree on the use of unallocated shares – as a one-off measure – to limit extreme cases of under-representation. This will reduce the need for additional SCIs in the future.