Credit could be provided to the economy via less capital-intensive channels, for instance via securitisation. 24 Macro-prudential measures can also encourage the so-called “race to the bottom”, whereby capital and liquidity is moved around within the group to the country with the lowest requirements.
While it is human lives that are ultimately at stake, the impact of such disasters may also lead to a decrease in asset value and collateral value, and the associated risk may come to be a significant challenge for financial institutions.