This article reviews the economic efficiency implications of the Basel II capital standards. The authors argue that the mapping from measures of loan risk to capital requirements should not be time-invariant, but rather should be allowed to vary with business cycle conditions. They also attempt...

This article reports on the size of the Japanese financial crisis (currently estimated to cost taxpayers 24 percent of GDP) and sketches the likely ingredients of a successful solution. The crux is that Japan's banks, insurance companies, and government financial agencies all suffer different...

This article reviews the evidence on differences in the transmission of monetary policy across European countries. The authors argue that the existing evidence, based almost exclusively on macroeconomic data, does not allow one to decide whether a common monetary policy will have asymmetric...

This article begins with a review of the growing literature on the role of banks in the transmission of monetary policy. The authors then discuss the implications of this literature for the operation of monetary policy in the European monetary union.