Strengthening the capital base is, naturally, also a central theme in the banking sphere. Insufficiently capitalised banks, in a pinch, can be an even greater hazard than insufficiently capitalised enterprises since this can pose considerable risks to financial stability as a whole. This became painfully clear during the crisis. However, the task of ensuring that financial institutions’ capital adequacy is primarily a regulatory task.
For many reasons, output and job growth over the next few years could prove to be stronger, and inflation higher, than I expect; correspondingly, employment could grow more slowly, and inflation could remain undesirably low.