In particular, banks will have to intensify their efforts to resolve the high levels of bad or so-called non-performing loans and the relevant authorities will need to remove the remaining obstacles hampering progress in this area. Naturally, some other conditions are also important, for example, the lifting of capital controls and the country’s renewed access to international financial markets.
Such market discipline – which in practice can best be applied only to those large institutions that rely significantly on uninsured on- and off-balance-sheet liabilities to finance their activities – requires a larger scale and scope of public disclosure than so far has characterized banking, even with the substantial disclosures already made by large US banks.