But sound monetary and fiscal policies are not enough to explain the success of the adjustment process. The flexibility of our economy has also been extremely important. When I say flexibility, I mean first and foremost the ingenuity and skills of our workers and business leaders. That's why education and training are so vital.
To the extent that institutions have experienced losses, hold less capital, and are operating in a more risk-sensitive environment, supervisors expect banks to employ appropriate risk-management practices to ensure their viability. At the same time, it is important that supervisors remain balanced and not place unreasonable or artificial constraints on lenders that could hamper credit availability.