Further using the above broad metric of credit, counter-cyclical capital buffers cannot be used to target risks in specific sectors or asset markets. Nor can they be tailored to allow less risky banks to face smaller buffers: all banks receive the same buffers regardless of their contribution to excess lending. 8.
The increased demand for property from a growing young population is likely to induce the institutional change of a loosening of financial laws and regulations that pushes up prices further, thereby fueling a malign price bubble. (These institutional factors will be discussed in greater detail by my fellow panelists Frank Warnock and Tim Riddiough.)