This means that any non-standard measure whose continuation would compromise the maintenance of price stability at any time in the future will be undone promptly and unequivocally. Second, the forward-looking initial design of the measures will help us wind them down when the time is ripe. The ECB’s non-standard measures were designed with exit considerations in mind.
Basel II presents an opportunity for supervisors to encourage these banks to push their management frontier forward. Of course, change is always difficult, and these new mechanisms are expensive. But a more risk-sensitive regulatory and capital system would provide stronger incentives to adopt best practice internal risk management. Let me be clear.