In the US in particular this phenomenon saw a large extension of credit into the sub prime space in the housing market. This was all aided by the securitisation process and the search for yield, which had its genesis in the high saving rates in other parts of the world.
(iii)  On its part the central bank has benefited from its continued pursuance of monetary tightening which had yielded visible results in May 2007 when core inflation fell much below the FY07 target of 6.5%. However this trend has been now disrupted by an unabated rise in Government borrowings from the central bank which has magnified risks for inflation.