In 2007 they had an average GDP per capita of 56.8% of the average level in the euro-zone (it was 28.2% in 1993). Although the process of income growth is present also in South Eastern Europe, its pace is slower. For the period 1996-2007, convergence was made to the income per capita in the countries of the euro-zone by 8.2 percentage points (from 20.8% to 28.9%). 2 What is clear from these  1  Source: World Economic Outlook Database, April 2008 and NBRM calculations. The indicator is unweighted average of GDP per capita of these countries. The indicators are according to the purchasing power parity. 2  Source: World Economic Outlook Database, April 2008 and NBRM calculations. The indicator for SEEU is unweighted average of GDP per capita of Macedonia, Albania, Croatia, Bosnia and Herzegovina and Serbia (for 2000). The indicators are according to the purchasing power parity. BIS Review 74/2008  1  comparisons is that the achievements are huge, but also that much more remains to be done in order to reach the level of old EU members. Why the speed of real convergence of the new EU member-states and of the candidate and potential candidate countries is different, is one of the frequently discussed questions. Taking classical theory of growth as a starting point, income actually depends on the factors of production and technological growth, meaning that the reasons for the differences should be sought in these factors.
The impressive advances in technology that have enhanced the industry’s ability to collect and process large amounts of information in real time could hardly have been suspected 20 years ago. Collecting risk data across many business lines has catalysed further efforts to aggregate those measures of risk by quantifying them in a more rigorous and more consistent fashion. The “ultimate expression” of risk aggregation is the summation of many types of risk into a single measure based on the concept of economic capital, which estimates the amount of capital a firm requires to protect itself against these risks with a certain degree of confidence. Using the concept of economic capital, banks can develop sound policies for monitoring exposure limits, risk-adjusted pricing policies and sound provisioning practices based on the inherent risks of the portfolios. They can also measure returns and assign capital on a risk-adjusted basis. Likewise, the progressive widening and deepening of financial markets and the continuous creation of new assets has enlarged the menu of choices available for banks to manage, share and transfer risks. The Basel II process started, more than 6 years ago, against this background of increasingly sophisticated risk management practices, heightened complexity in the financial markets and stronger interaction between the real and the financial economy. Rather than simply resetting the quantitative standards, we sought to develop a new forward-looking approach that would be more sensitive to the actual risks that banks take on. The new framework is a significant step towards achieving a more comprehensive and risk-sensitive supervisory approach.