This point is reinforced by the observation that when an institution is short of capital and can’t get more on the private market, there is really no backup plan, short of resolution. By contrast, as I mentioned earlier, when an institution is short of liquidity, policymakers do have a backup plan in the form of the LOLR facility.
And is it possible that a modest decline in resource utilization will not cumulate into something more serious, as it has tended to do in the past at least without a major adjustment of policy?