"FDIC vice-chairman Thomas Hoenig has expressed concern about Deutsche Bank's capital levels; Barclays has just had a rights issue; Japanese government debt has reached record levels. What importance would you attach to the above, particularly Japanese debt, in a context of rising long-term rates?"

David Fuller's view European banks are generally undercapitalised, given that they are also holding a considerable amount of questionable debt. Also, Western government debt has increased considerably in recent years, and Japan's is even higher. Long-term rates were always going to rise as economies recovered, but central banks clearly need to keep them from moving excessively higher, if possible. That means keeping inflationary pressures under control.

This is possible, given the disinflationary pressures of a global economy. However, we also need luck and planning, particularly in terms of food and energy prices. Japan's does not have a problem with rising long-term rates, at least not yet, although they have certainly seen their low.