It is an important principle that differences in capital rules among institutions should not distort financial markets or create artificial competitive advantages for any particular class of banks. With this principle in mind, the Federal Reserve has conducted research on the potential competitive impacts of Basel II, and all of the U.S. banking agencies have received comments from many sources.
In 2007 Ireland and Spain recorded fiscal surpluses (respectively 0.3 and 1.9 per cent of GDP) and had relatively low public debt-to-GDP ratios (25 and 36 per cent, respectively). This suggests, as Balcerowicz also acknowledges, that standard fiscal indicators are not sufficient. Moreover, a tighter fiscal policy can sometimes help, but it is not a panacea for macro imbalances.