15 Moreover, the debt has largely been funded by the household sector, which has sustained a very high rate of saving. Although this does not preclude the possibility of substantial disruption in the financial system, it does provide some leeway for authorities attempting to ensure that the financial system remains liquid.
The extent of that leeway will potentially depend on the effectiveness of capital controls. But that is a topic for another time. 15  10  There is a tension between the government maintaining the smooth functioning of financial markets through implicit guarantees of financial institutions, and the problems of moral hazard and inefficient resource allocation that can result.