Basel III is undoubtedly well thought through and reflects the lessons of the crisis. However, its implementation comes at a time when EMEs see their credit demand picking up. India, for example, is the second fastest growing economy in Asia but our credit-GDP ratio is the second lowest in Asia. Non-bank sources of credit and internal savings have kept bank credit growth low.
According to the Bank's assessment presented in the April 2018 Financial System Report, although Japan's financial system as a whole is not showing any signs of overheating, some indicators, such as the lending attitudes of financial institutions, are very close to a state of overheating.