It will therefore not only  BIS Review 46/1999  6  reduce the cost of regulating and supervising financial institutions but should also lessen the burden on the safety net by preventing failures.
When this happens, there is very little available slack. In other words, the amount of unused resources, or spare capacity in the economy – is very limited or non-existent. The problem with overheating is that it tends to result in a harmful downturn.8 Temporary surges create dynamics that are difficult to reverse. For example, wages can rise quickly to unsustainable levels.