If the country’s political leadership and key administrative infrastructure were caught up in an earthquake, this could drive a bigger financial reaction, and make government policy responses much harder. Reserve Bank planning for emergencies In the event of an emergency the Bank’s focus would remain on the maintenance of economic stability, as much as possible.
Finally, a credible framework for resolving failing banks is necessary to eliminate the risk of a long period of economic stagnation brought about by chronically weak bank balance sheets. The Council agreement on the Bank Recovery and Resolution Directive, including the new bail-in rules, is a step forward.