As you may know, the membership has just agreed to an increase of 45 percent, equivalent to about $ billion, in IMF quotas. This will raise the capital base of the institution to some $ billion. In addition, the Fund has taken steps to augment its financial resources through the agreement on the New Arrangements to Borrow. Under these arrangements, participants would be prepared to lend up to the equivalent of some $ billion when additional resources are needed to forestall or cope with an impairment of the international monetary system, or deal with an exceptional situation that poses a threat to the stability of the system. We hope that participants who have not yet done so will complete the necessary legislative action so that these arrangements can enter into force soon. BIS Review 111/1997  -6-  Furthermore, in order to allow all members to participate on an equitable basis in the SDR system, agreement has been reached on a proposal to amend the Fund’s Articles of Agreement to authorize a special one-time allocation of SDRs of about $ billion that would equalize all members’ ratios of SDR allocations to quotas and would double the amount of SDRs allocated to date. These resources will supplement members’ reserves, giving them more flexibility in economic policies and a cushion against adverse developments. Last but not least, recent experience has demonstrated once again that early warnings cannot always prevent crisis from blowing up.
Net interest income has been an important driver of the improved bank performance, on account of the steeper yield curve and wider operating margins. The tightening of credit standards, the gradual pass-through of lower policy rates to lending rates and declining competitive pressures in the credit market have all contributed to higher revenues from core banking business. Trading income has increased even more strongly as the financial markets  4  BIS Review 168/2009  recovered after the first quarter of 2009 and has been the main contributor, on average, to the increase in revenues as a percentage of assets. With regard to bank capital positions and loan-loss provisions, I would like to highlight the following points. The recovery in major banks’ earnings, the slowdown in the growth rate of both risk-weighted and total assets and increases in capital have contributed to a slight increase in the regulatory capital ratios of the median institutions. Even those institutions with the lowest regulatory capital ratios comfortably exceed at present the minimum requirements (see the left side of Chart 11). Provisions on impaired assets had been a serious drag on euro area LCBGs’ incomes in 2007 and 2008. To a large extent these provisions still related to securitised loans, although the share of loan impairments had started to grow. Most institutions have reported sharply higher provisions for loan losses (see the right side of Chart 11). Moreover, expressed as a percentage of total loans, loan-loss provisions were the highest in the third quarter compared to the five preceding years.