Crucially, it helped prevent a deterioration of lending standards and the build-up of systemic risk in the run up to the COVID-19 shock. The stock of loans to households and house prices were growing in line with GDP and household income.
When capital inflows subside, or switch into outflows, as a minimum: n n n n  the exchange rate must be allowed to absorb part of the shock; an outflow of capital must reduce liquidity in the banking sector; interest rates must be allowed to rise; and some inflationary pressures will develop that will require, almost immediately, more restrictive monetary and fiscal policies.