BIS Review 54/2009  9  economy remain robust. Thus, domestic bank credit supply can shrink during crisis episodes. For instance, in response to the stock and real estate market collapse of early 1990s, Japanese banks pulled back from foreign markets – including the United States – in order to reduce liabilities on their balance sheets and thereby meet capital adequacy ratio requirements.
We must not forget that at the center of any financial crisis lies a crisis of the real sector of the economy, and that correcting the conditions for sound operation of the real sector is thus of paramount importance.