So, having an additional check on the consistency of policy with medium-term objectives could be useful when policymakers choose not to adjust policy in line with the policy rule. Second, even if the rule were adhered to, another check might be useful. In particular, the difficulty in implementing the policy rule in practice makes a reference value for money growth valuable.
For their part, bank supervisors needed to pay more attention to emerging weaknesses and deal with them more quickly. Solving the immediate problem of weak asset quality and improving the industry’s overall profitability was, of course, the first priority, and fortunately that was accomplished sooner than anyone expected.