It is also pertinent to mention here that the present legal system does not facilitate an easy closure/takeover of unviable firms. In order to overcome such problems and to salvage value in firms in distress, it is imperative to take measures for an early enactment of a Bankruptcy Code.
Importantly, these two options also are consistent with our goal of maintaining overall levels of capital in the banking system: The first option would be to set the CCyB at a higher baseline level during normal times. And the second option would be to raise the “floor,” or the minimum level, of the SCB.