It would be wrong, however, to think that this means a return to the growth experienced in bank balance sheets in the period since the mid 1990s. That was an extraordinary period, driven by what was largely a one-off adjustment to household gearing following financial deregulation and the sustained fall in inflation.
We are committed to learning the lessons from the U.S. bank failures for our program of supervision and regulation. I will offer three observations about the events. The first observation is that it is very difficult to resist the natural human tendency to fight the last war. In 2008 we saw banks come under stress from outsized credit losses and insufficient liquidity.