Cases of this kind become more likely during prolonged recessions, such as the one we have passed through. We are working to persuade banks to strengthen their operational, organizational and corporate governance safeguards in order to prevent credit relationships with customers from degenerating and to take remedial action when they do.
The Council fully understands the importance to the public of managing systemic risks and mitigating its disruptive effects. While financial stability is not about a forecast of the future, it is nonetheless all about considering all reasonable likely outcomes. Some of you may know of the mantra of Hyman Minsky who once argued that it is in good times when instabilities are developed.