This has taken on increasing importance given the rapid growth of trading book assets relative to the banking book. For example – the Basel Committee – in consultation with the industry – continues to work on developing a framework for better capturing the default risk associated with credit exposures in the trading book.
Global financial conditions tightened. This tightening, however, proved short-lived, as the continuation of benign (and, in some cases, soft) inflation developments allowed major central banks to pause, or delay, the start of their normalisation process.