Because capital buffers have been maintained well above the minimum regulatory requirements, overall euro area LCBGs appear to be sufficiently well capitalised to withstand severe but plausible downside scenarios.
Thus, the financial sector, in particular the banking system, is utilised as a conduit by the Government’s fiscal policy, to subsidise select activities or vulnerable  2  BIS Review 131/2007  sections, and RBI plays a supporting role in enabling such measures while emphasising the longer term goals of a conducive credit culture.