Japan’s experience of its bubble economy is a good example. Japan learned just how difficult it is to control asset prices solely with macroprudential tools such as an administrative ceiling on bank loans to the real estate sector.13 Thus, in detecting tail risks and tackling tail events, we have to avoid any complacency or false sense of security in our macro-prudential policy framework.
The most important of these was the establishment of the FSC, with responsibility for the supervision of non deposit takers. The FSC is in the process of recruiting staff and setting up systems, and Central Bank is lending its expertise wherever we can be helpful. This morning you will hear more about its activities from the FSC themselves.