BIS Review 145/2007  17  •  As greater inter-linkages and excessive reliance on call money borrowings by banks could cause systemic problems, prudential measures have been introduced to address the extent to which banks can borrow and lend in the call money market.
Empirical evidence has shown that fiscal adjustment is critical to successful stabilization effort in countries facing domestic debt overhang. It should be noted, however, that deficit budgeting, per se, is not the critical issue of concern. Rather, it is the size, source of financing and quality of expenditure.