Furthermore, if we determine that tighter capital requirements are necessary but believe they have a negative spillover effect on credit supply, we should combine the tightening with initiatives to mitigate pro-cyclicality. A useful analogy can be drawn with MP, where interventions aimed at controlling the exchange rate can be sterilized in order not to affect the domestic money supply.
Even in the best of times, homeownership limits mobility in the labor market. Today’s summit and companion publication also highlight several promising models of “non-redevelopment” to stabilize communities, such as simple code enforcement, land banking, and demolition.