These swift micro- and macroprudential policy actions sent a clear signal that banks are encouraged to make use of their existing capital buffers so they can continue to provide key financial services and absorb losses while avoiding abrupt and excessive deleveraging that would be harmful for the economy. Indeed, prudential buffers are designed to be used, or drawn down, in periods of stress.
Conditional commitment in action – changes in the policy outlook since 2014 The changes in the Bank’s policy stance since the beginning of 2014 provide a good illustration of the conditional nature of forward guidance in practice.