The two conflicting opinions quoted above refer to a recent suggestion by the Basel Committee on Banking Supervision (BCBS). In 2001, the Committee proposed to introduce public disclosure requirements for banking organizations as an integral part of a new capital adequacy framework.
The suggestion came as a part of the general shift of financial disclosure requirements from the disclosure of economic earnings and other information about present results to wider disclosure of information useful in assessing the amount, timing, and uncertainty of prospective earnings. In banking, an emphasis on enhanced bank transparency was brought about by the growing complexity of financial environment and increased diversity of information needs. Hence, the Committee, facing the challenge, envisioned the mandatory disclosure rules for banks as a core component necessary to assure the market’s monitoring of the capital adequacy of banks.
Standard international macroeconomics predicts that capital should flow from capital-rich countries, where the marginal return on capital is low, to capital-poor countries, where the marginal return is high. By implication, such capital flows would improve the international allocation of capital and raise global output. Furthermore, there would be no difference between gross and net capital flows, as capital movements are unidirectional.
The patterns of international capital flows observed in the past 20 years, however, stand in stark contrast to these predictions. First, Lane and Milesi Ferretti (2006) show that developing countries have accumulated large stocks of net foreign assets over the past decade, while industrialized countries, and the U.S. in particular, have increased their net foreign liabilities. Prasad, Rajan, and Subramanian (2006, 2007) document that the average per-capita income of countries running current account surpluses has trended downwards in the past three decades, while that of deficit countries has trended upwards. Since 1998, the relative per-capita income of the surplus countries has actually been below that of the deficit countries, i.e., net capital flows have been “uphill” from poor to rich countries. Second, many emerging markets have experienced much faster growth of their gross external financial assets and liabilities than of their net positions (Lane and Milesi Ferretti, 2001, 2006, 2007). Ju and Wei (2007) observe that many developing economies, including China, Malaysia, and South Africa, are net importers of foreign direct investment (hereafter, FDI) and net exporters of financial capital at the same time, while developed countries such as France, the United Kingdom, and the United States are net exporters of FDI and net importers of financial capital. Third, despite of a negative net international investment position since 1986, the U.S. have been consistently receiving a positive net international investment income until 2005 (Gourinchas and Rey, 2007; Hausmann and Sturzenegger, 2007; Higgins, Klitgaard, and Tille, 2007). Given the huge net foreign liabilities of USD 2.5 trillion, the U.S. paid out only USD 3.4 billion in net income payments to foreign investors during the first half of 2006, implying payments on net international liabilities at the annual interest rate of 0.27%. In other words, the U.S. is a significant net debtor actually for free!
Research shows that improving the usability of software systems—including information-technology (IT); e-commerce; “shrink-wrapped” and other commercial software—can be highly cost-effective. The benefits of usability engineering extend beyond improving a system’s user interface (UI) and end user productivity; its beneficiaries include not only end users but also system developers and the companies they work for. Usability techniques can reduce software and e-commerce costs (including development, support, training, documentation and maintenance costs), shorten development time and improve marketability.
