It has also taught us that a lot of people actually know far less about how the economy works than they would like others to believe, the implication being that it is particularly when things are going well that we should be asking ourselves “why”, and not assuring ourselves that it has been good judgement only 1.
The continued emphasis on dialogue is even more important because a few important elements of the framework are still considered works in process. For example, the Basel framework issued last June did not define the exact manner in which institutions should calculate their estimates of loss given default (LGD) based on periods of economic downturn.