Mitigating moral hazard by either incentivising borrowers to repay or increasing the borrowers’ cost of defaulting as non payment with one institution would result in sanctions from all others. This would encourage debt repayments and a more efficient recycling of credit.
My role today is to discuss the actions the government is taking to address our current financial and economic difficulties. Although my fellow panelists will be discussing how we got here and the regulatory policies we should adopt to prevent a recurrence, I won't be able to fulfill my task without impinging a bit on their topics.