So regulatory forbearance, which is a euphemism for regulators collaborating with banks to hide problems and push them into the future, is a bad idea. Moreover, forbearance allows banks to postpone provisioning for bad loans. So when eventually the hidden bad loans cannot be disguised any more, the hit to the bank’s income and balance sheet is larger and more unexpected.
During the course of this recovery, global economic activity has risen strongly and is now back above its pre-crisis level. At the same time, price increases accelerated noticeably and on a broad scale. Multiple factors were behind this acceleration. For one thing, energy prices rebounded as the world economy recovered from the pandemic-induced recession.