While the proposals reflect the inherent risks already embedded in banks’ trading books, they will be phased in over an appropriate period to give the banking sector time to adjust to the new requirements. We are strengthening the disclosure requirements for banks’ risk exposures and the adequacy of capital to support these exposures.
At the same time, high inflation has eaten into domestic demand, which contracted by 2% over the last two quarters[6], and the consumption impulse created by excess savings is fading. [7] The early effects of our policy tightening are also becoming visible, especially in sectors like manufacturing and construction that are more sensitive to interest rate changes.