While not all businesses have bank debt, it is of direct relevance to our own mandate here at the Central Bank of Ireland, given our role in banking supervision and financial stability, to understand the performance of SME and corporate loans on bank balance sheets.
A large, widespread and rapid increase in loan loss provisions would have the potential to lead to pro-cyclical tightening of credit supply from banks, curtailing an economic recovery. This is why we ask banks to have more capital in good times, so that they can absorb losses in bad times.