that they lose value over time. This loss of value is intended to encourage owners of money to spend it quickly. Hoarding loses its appeal. While the velocity of money in circulation actually increases, the money supply falls because of the relatively high cost of holding money. Thus, a steady stimulus of demand for goods cannot be expected.
Our goal is to have banks recognize and manage well the risk they are taking, price the risk appropriately and avoid undue concentrations of risk. In that way we hope to reduce systemic risk. A second difference between consultants and supervisors is in the need for consistency across banks. Consultants generally place little value on consistency across clients.