Again, textbook ideas have been unhelpful in practice – the idea that private sector borrowers and lenders (“consenting adults”) will work things out satisfactorily has proved naïve: the collateral damage is too great. Private sector debt was (and remains) a festering sore which inhibits the return to health of some Asian economies.
On previous occasions I have mentioned to you that legal acts are under preparation which specify general principles to be followed by the national central banks when carrying out operations in domestic assets and liabilities and in foreign exchange reserve assets remaining with the national central banks.