Cycles of boom and bust, "irrational exuberance" and gloom, occur from time to time. With the benefit of hindsight, it is now clear that the surge in the American stock markets, in particular, in recent years was overdone and a sharp correction, with the attendant volatility, was inevitable. This has had some implications for currency markets as well.
At the national level, we can add an extra capital buffer if we assess that there is a risk of excessive credit growth. The Central Bank of Ireland has also introduced borrower-based measures in the form of ceilings on loan-to-income and loan-to-value ratios in the mortgage market. These mortgage measures make the banks safer, while also protecting consumers from over-indebtedness.