2  Under the QE policy, the uncollateralized overnight call rate stayed at around 0 percent owing to the ample liquidity provision. To be precise, the interest rate under the QE policy declined to 0.001 percent – a level even below the 0.02-0.03 percent that prevailed during the zero interest rate policy.
The recovery plan should take into account challenges in relation to both solvency and liquidity. Obviously, it is critical for an institution if losses reach a magnitude that jeopardises its solvency. But that will happen at a very late stage.