Our liquidity facilities, the reduction of uncertainty about the capital and liquidity needs of the largest banks after the results of our capital assessment were published in May, and the emerging stabilization of the housing and other key sectors of the economy have helped a number of financial markets resume more normal functioning.
The prudence we require in the assessment of loans helps to safeguard the integrity of banks’ capital and contributes to increasing the market’s confidence in them. Analysts and investors want the amounts stated in balance sheets to reflect the actual quality of banks’ assets and provide reliable indications of the risks involved. Prudent provisioning policies encourage the disposal of impaired items.