The banks benefited from strong local roots, which ensured stable sources of funds and underpinned the qualitative assessment of their creditworthiness, and from a fundamentally unadventurous corporate culture. The test was, and still is, a hard one, though. We insisted that the banks strengthen their capital without delay.
He cautioned that expectations from macro-prudential policies should not be ambitious, since without a range of reinforcing policies and instruments, the effectiveness of prudential measures could be limited. On the scope for conflicts between monetary policy and macro-prudential policies, he viewed that such concerns were overdone.