To begin, we knew back in 2008 that stimulative monetary policies would encourage people to borrow more to buy more homes and cars. That is why we do it – to buffer the downturn in the economy. This happens in every business cycle, not just this one.
What distinguishes this cycle is its duration, which is leading to a buildup of financial stability risks over time. We study these risks in detail in our Financial System Review, which is published twice a year. The next issue will be released on 10 December. Importantly, the world has changed since 2008.