This is a considerable easing in monetary conditions, which will not have its main effect on activity and inflation until well into 1998 - at about the time the economy is also experiencing a strong stimulus from reduced tax rates and increased government expenditure. In other words, the suggestion that the Reserve Bank has been braking the economy in recent months is factually wrong.
Banks are good in minimizing high frequency low severity risk events but it is often low frequency high severity events that can jeopardize the existence of a bank. Hence we need to identify and analyze predictive key risk indicators and use scenario analysis to simulate the impact of irregular events.