Beyond this, however, thought is called for on how to moderate the credit cycle that lies behind the fluctuations in asset prices. Incentives are needed to encourage banks and other financial institutions to build up capital cushions in good times, in order better to protect themselves, and the wider economy, when the bad times arrive.
Through the joint communication, the international central banking community provided a signal of its strong commitment to responding to the macroeconomic implications of the financial market turmoil.