In less severe situations Government and banks could dig into capital or reserves to absorb losses coming from unrecoverable debt. The sudden emergence and severity of the banking losses in Ireland since 2008 has greatly exceeded the banks’ capacity in this regard, and has pushed the Government to its limit.
1  BIS Review 21/2000  Of course, large voids of information still persist, and forecasts of future events on which all business decisions ultimately depend will always be prone to error.