[4] Michael Ehrmann, “Rational inattention, inflation developments and perceptions after the euro cash changeover” ECB Working Paper Series, 588, February 2006.
Such a regime of greater formal attention to risk exposures, as under Basel II, offers the hope of a more stable pattern of credit availability. Quantitative risk management should reduce the buildup of excessive unintended credit risks that have been assumed in expansions and thereby minimize the losses and associated tighter lending standards during recessions.