We intend to work with the banking industry, and in particular with the banks directly concerned, to ring-fence domestic banking operations which will be subject to full supervision including risk-based and macroprudential supervision. To achieve that, we shall move away from the current bank-holding model to the bank-subsidiary model. This will require some re-structuring and re-engineering. That, and more innovation is for the future.
A further point to add here is that even maintaining a balanced fiscal position on a daily basis would not ensure these effects would be avoided. Even with the fiscal position in balance, the system could be destabilised by changes in the public’s demand for currency.