It is, of course, impossible to entirely eliminate risk without stifling competition, unduly damaging innovation and efficiency and incurring prohibitive costs. However, to contain risks as much as possible, the Bank’s prudential supervision system includes a comprehensive and rigorous authorisation process and a system of ongoing supervision which includes both quantitative and qualitative measures.
The principle quantitative measures for banks are requirements relating to minimum capital and liquidity levels, large exposures to individual borrowers or to an associated group of borrowers, lending to connected parties (e.g. directors) and to individual economic sectors, concentration of deposits and acquisitions by banks of other entities, or by other entities of banks.