markto-market accounting) and the dependence of collateral values and leverage ratios on asset prices. These structural incentive problems have not been fully taken into account by regulators and supervisors.
[Slide 9: External adjustment and total borrowing requirements] The recent European Commission’s Spring Forecast foresees that for this year, with the exception of Greece with a deficit of just –1.1% of GDP, all other countries under stress will be in current account surplus.