From Luci Ellis, Head of Financial Stability Department yesterday:
Related to the need to look at the whole system is that, in their efforts to protect the real economy, policymakers need to ensure that credit is still being supplied to good borrowers even in bad times. A healthy and resilient banking sector can help achieve that; indeed, it would be difficult to manage it without one.
The ongoing need for credit, and thus the value of a well-functioning creditor sector, is sometimes underappreciated. Especially since the crisis, the dangers of too much credit have become all too apparent. Over-exuberant lending and borrowing can mean that some people are getting loans that they have little prospect of being able to repay even in good times.
