BIS Review 17/2008  1  As a footnote to banking performance last year, I would like to mention that the banking system was not significantly affected by US subprime mortgage market problems. First, because Philippine bank exposure to the CDO market was only 0.2 percent of total bank assets as of mid 2007, and none of these have subprime mortgages as underlying assets.
They can only be measured in a reliable way ex post, with the benefit of hindsight. “Life can only be understood backwards, but it must be lived forewards” as the Danish philosopher Kierkegaard said. This is certainly true for monetary policy, with its medium term objectives. How to cope with this? I’ve learnt a couple of things since I thought the world was flat.