However, it would be unrealistic to expect that these measures can entirely smooth out the credit cycle, just as it would be unrealistic to expect that the authorities can eliminate the cycle in equity markets. These cycles are inherent in human behaviour.
History shows that it takes time for households, businesses and lenders to regain confidence after a financial crisis, and there are limits on the extent to which economic policy measures can accelerate the process. This is a very significant issue in many developed countries at present. Here in Australia, the credit cycle was mild compared with overseas experience, but nonetheless there was a cycle.