However, while analysis such as this is vital to understand the risks posed to the banking sector, I would also highlight the following points: First, the degree of uncertainty with these projections is high, not just in terms of the macrofinancial outlook, but also the impact of the various extraordinary policy supports, and how both of these ultimately interact with banks’ balance sheets.
Second, the system-wide position does not discount the potential for different impacts on individual banks. Given the heightened levels of uncertainty, all regulated firms need to prepare and plan for a variety of eventual outcomes. Third, the response of the banking system itself will shape eventual outcomes.