BIS central bankers’ speeches  1  II. Lessons learned  What lessons can we learn from this experience? To avoid falling into deflationary equilibrium, especially in the face of huge negative shocks, I think that it is important for the authorities to adhere to the following three principles. First, we definitely need to avoid a financial crisis.
In 1997, we lacked a solid safety net such as a deposit insurance system and a bank resolution mechanism that could effectively deal with a systemic disruption. We failed to stop a large-scale banking crisis because these institutional frameworks were not in place.