In sum, the favorable financial conditions in the transitional period will not be forever. This is a great chance, on a first-come-first-served basis. The environment surrounding firms is totally different between the economy in a shrinking equilibrium under deflation and the economy in an expanding equilibrium under the 2 percent inflation. The rule book for business will be rewritten.
This would imply that no tax payer money is under threat of being used in a bail out. Therefore it is essential to strive for good recovery and resolution plans. A solid plan will also enhance the bank’s own risk management and potentially increase transparency of the bank to outsiders.