The return to growth and the easing of the interest burden will help to increase firms’ profitability and improve credit quality. Banks need to accommodate rising loan demand while maintaining strict control of risk, and of credit risk in particular. In this phase a further stiffening of capital and liquidity requirements could impede the supply of credit, delaying the economic upturn.
In the meantime our institutions continue to become more complex raising the issues of potential contagion and the effective management of systemic and liquidity risks. The need for specialists in our supervision departments to deal with these and other emerging complexities such as financial modeling, is a matter that we must address as a region.