As is widely known, the British pound and the euro are both important convertible currencies, and we will pay attention to counter-cyclical adjustments to prevent the sheep-flock effect. When necessary, we will adopt macro-prudential policies in dealing with cross-border capital flow, with a view to stabilizing market expectations.
Banks raised (mostly short-term) funds in the euro money market and converted them into (longterm) loans to the private sector, creating an important maturity mismatch in their balance sheets. The loan-to-deposit ratio for the whole banking system rose from 89% in 1998 to 156% in 2007.