prices above longterm average (in the case of statistical models) or fundamental values (in the case of economic models). Figure 4 Domestic credit-to-GDP gap in the euro area  Source: European Systemic Risk Board and Banca d’Italia’s calculations. Note: the credit-to-GDP gap is calculated as the deviation of the ratio of total credit to nominal GDP from its recursive one-sided Hodrick-Prescott trend.
2  BIS central bankers’ speeches  Moreover, a major on-going development is the implementation of Basel III in Pakistan from December 2013. Our efforts to keep the banking sector well capitalized and have sufficient capital buffers to absorb minor to moderate shocks can be judged from the fact that our banking sector has healthy capital adequacy ratio of 16%.