BIS Review 122/1999  2  The answer to that question is the key to our dilemma in interpreting signals from the markets. It could be that investors in long bonds are looking ahead to an economic upswing and that they are already beginning to anticipate the point in time when the monetary authorities will begin tightening policy again.
Small banks are not “too big to fail” and thus do not have an implicit guarantee by the state that they will be rescued; they therefore have from the outset less incentive to take particularly high risks. Supervisors should address these differences in their requirements. The principle of proportionality needs to be upheld. 3.