Household balance sheets are weaker.

Rather, it will increase banks excess reserve balances.

A second approach, on which there is substantial agreement in principle, is to limit leverage.

The institutional checks and balances built into Russia s constitution have been neutralized.

In some cases, funding challenges remain, and balance sheets have not been fully cleansed.

The combination of these negative trends is affecting these countries fiscal as well as external balances.

Banks with large exposure to Eastern Europe found their balance sheets impaired.

Indeed, sovereigns are dumping a larger fraction of their public debt onto banks balance sheet, especially in the eurozone.

The banks, having been recapitalized only to the extent necessary to keep them afloat, still have weak balance sheets.

Both of these measures should help a lot in bringing the US and Chinese trade balances toward more sustainable levels.

For example, ordinary citizens could be allowed zero interest transactions balances (up to a limit).

Doing so would strengthen their balance sheets, crowd in the private sector, and generate employment.

The main argument is that high leverage contributes powerfully to systemic risk a condition in which asset prices move in a highly correlated way, and distress, when it occurs, spreads quickly. Leverage is also partially caused by misperceptions of risk and mispricing of liquidity. It is desirable to constrain leverage, but not to the point of increasing the cost of capital and investment.

A recession caused by too much debt and leverage (first in the private sector, and then on public balance sheets) will require a long period of spending less and saving more.

The scale of the penalties is now large enough to have a substantial impact on banks balance sheets, delay the restoration of their health, and constrain their lending capacity.

Investors, seemingly even less informed about the risk of excessive leverage than banks, put enormous pressure on banks to undertake excessive risk.

Banks would scale down their balance sheets in proportion to their reported equity losses and exacerbate the credit crunch from which the world is already suffering today.

This temporary collapse has shaken public confidence and endangered the balance sheets of Ukrainian banks and companies that have hard currency debts.

With a V shaped recovery, however, this expenditure fell again, reducing the deficit rapidly. The recovery could only be partial, because the previous level of output was unsustainable, but it was enough to allow the government to balance its books again.

The government likewise subjects officials to lifestyle checks and vets their statements of assets and liabilities to find out if what they have acquired is commensurate with their declared income.

The recovery could only be partial, because the previous level of output was unsustainable, but it was enough to allow the government to balance its books again.

But China s export led development model will need to be adjusted as global trade and financial balances become more contentious.

This rendered potentially insolvent commercial banks, whose balance sheets were loaded with such bonds, giving rise to Europe s twin sovereign debt and banking crisis.

In practice, it is only banks that have access to cheap borrowing, so they can reconstitute their balance sheets by borrowing cheaply and lending expensively.

If a gradual process of disintegration eventually makes a eurozone breakup unavoidable, the path chosen by Germany and the ECB large scale financing for the eurozone periphery would destroy the core central banks balance sheets.

Just as a firm needs to measure the depreciation of its capital, so, too, our national accounts need to reflect the depletion of natural resources and the degradation of our environment.

Higher capital ratios, lower exposure to bad loans, and more transparent balance sheets increase the chances that the ECB s quantitative impulses will be transmitted to the wider economy.

Similarly, central banks inflated balance sheets the result of short term crisis response measures could, through refinancing arrangements, be used to boost green investment.

What matters more than deficits is what we do with money borrowing to finance high productivity investments in education, technology, or infrastructure strengthens a nation s balance sheet.

CHICAGO World growth is likely to remain subdued over the next few years, with industrial countries struggling to repair household and government balance sheets, and emerging markets weaning themselves off of industrial country demand.

China might want oil from the Middle East, but those in the Middle East with so much wealth concentrated in so few hands might be more interested in Gucci handbags than in China s mass produced goods. So China can have a trade deficit with the Middle East and a trade surplus with the US, but these bilateral balances indicate nothing about China s overall contribution to global imbalances.

So China can have a trade deficit with the Middle East and a trade surplus with the US, but these bilateral balances indicate nothing about China s overall contribution to global imbalances.

Private and public sector deleveraging in the advanced economies has barely begun, with balance sheets of households, banks and financial institutions, and local and central governments still strained. Only the high grade corporate sector has improved.

Private and public sector deleveraging in the advanced economies has barely begun, with balance sheets of households, banks and financial institutions, and local and central governments still strained.

Undervalued exchange rates are only one of the policies that countries use to boost exports and restrain imports, so that they run trade surpluses, while their trading partners (including the US) run deficits.