We had to learn the hard way that sophisticated financial markets are also prone to exuberance and contraction phases which hamper their proper functioning. We thus have to ask ourselves some difficult questions on how these markets can function better and better serve economic development.
6/7  BIS central bankers' speeches  Moreover, one of the main channels through which high NPLs can have a feedback effect on the macroeconomic environment is through their impact on bank lending capacity to the economy. NPLs can weigh negatively on the supply of credit by locking in bank capital and funding in the financing of non-productive assets.