To meet their challenging return targets, such institutions could be prone to engage in search-for-yield behaviour and take on excessive risks. Monitoring financial stability developments Our current assessment is that there is no widespread emergence of imbalances, but there remain some localised areas that require continued close monitoring and vigilance.
In keeping with our institutional framework, macroprudential policy has been appropriately active in mitigating the build-up of risk in these localised areas. In terms of the banking sector, authorities have taken decisions to identify global and domestic systemically important financial institutions, requiring them to hold additional capital buffers.