Banks are now as profitable as they were before the pandemic and their balance sheets remain solid. According to our latest Bank Lending Survey, loan demand by firms increased strongly in the last quarter of 2021. This was driven by both higher working capital needs, stemming from supply bottlenecks, and increased financing of longer-term investment.
A system for electronically matching confirmations will be helpful only if substantial portions of a firm’s counterparties use the same system. Similarly, electronic trading systems require a critical mass of participants. Need to strengthen collateral management practices. The volatile market conditions that surrounded the LTCM episode provided a test of many firms’ risk management systems and particularly their collateral programs.