It is both likely and desirable that required capital ratios around the world will rise in the wake of the crisis, and that there will be a greater emphasis on Tier I capital. The Spanish model of countercyclical capital ratios has gained widespread support and is likely to be implemented in more countries, and this should contribute to stabilizing the business cycle.
However, I will offer a few guesses on Asia’s prospects. I will also offer some observations on the nature of the adjustments and transitions now being worked through in Asia, especially within the financial sectors of the affected countries.