Economic Backdrop The banking sector, being the barometer of the economy, is reflective of the macro-economic variables. As per the RBI Financial Stability Report Dec '14, the global economy was a mixed state of affairs the last year. While economic growth finds hold in US, it appears to be going weaker in Euro areas and reversing in Japan. Any economic conflicts in China will add to the pressure. Thus, the global economic prospects remain uncertain. Stock markets around the world, particularly in advanced economies (AEs) have been buoyant off late with relatively lower volatility.