The ability of banks with significant concentrations to weather difficult market conditions will depend heavily on their risk management processes and the level of capitalization. From a risk-management and capital perspective, institutions generally should focus on the emerging conditions in their real estate markets, the potential cumulative impact on their portfolios if conditions deteriorate, and significantly employ other exercises to help identify CRE vulnerabilities.
15 Publishing this framework provides greater transparency about how we might use these tools. This work is about being prepared for any range of potential eventualities, it is not a prediction of whether additional monetary policy tools will be needed. Table 3 outlines the principles we would use to guide the use of the tools. For example, Evgendis, A., & Fasianos, A. (2019).