The micro-prudential supervisor’s concern for more capital, faster, is rooted in scepticism over the asset quality of the European banks’ balance sheets, due to practices of  BIS central bankers’ speeches  3  forbearance and failure to recognise embedded losses.
This shock gave rise to a large “output gap,” sometimes referred to as slack, which, in turn, is working to keep inflation low. According to this view, the large output gap and low inflation justify keeping interest rates near zero for a long time.