Whereas in the past regulators often played catch-up, this time around it is noticeable that regulators have adopted a far more collaborative and proactive approach. We see partnerships like Project Stella between the Bank of Japan and the European Central Bank exploring the impact of distributed ledgers.
First of all, a cap on repayment obligations is expected to nudge the lenders to keep the interest rates low so that the repayment instalments do not exceed the maximum prescribed limit for repayment obligation. Second, measures to check over-indebtedness should also result in improvement of credit worthiness of the borrowers, bringing down the credit risk premium which should translate into lower interest rates.