To control credit supply, reserve requirements (credit, repos, commercial paper), interest-rate ceilings (time and saving deposits), capital requirements and restrictions on the types of loans banks could hold in their portfolios, have been utilised.
Second, in supervising existing firms, regulators must make measured judgement calls in relation to the shifting business models and the appropriate level of capital required to provide a buffer vis-à-vis the associated risks. Third, as noted earlier, credible and effective resolution regimes are necessary to manage the failure of established or new firms.