This is what determined the additional capital requirements announced in March 2012. Our assessment of the capital needs of the banks will evolve over the coming years. As I stressed here eighteen months ago, loan-loss projections following a big bust involve an irreducibly large element of uncertainty. At the Central Bank, we continue to research the determinants of loan losses.
Economic conditions (including house prices) facing the borrowing firms and households are not the only determinants. As we have been stressing in other fora, the effectiveness of the banks’ engagement with their stressed borrowers, as well as the legislative and administrative framework for dealing with insolvency (details of which are being announced by the Government today) are important factors.