9  The Bank of England’s June 2000 Financial Stability Report highlighted the risks to the financial sector of the heavy debts taken on by telecoms firms to finance purchases of licences. BIS Review 134/2009  7  Second, and again anticipating part of my later remarks, the residents of industrialised countries are free to borrow from abroad, so total credit growth may lie beyond the control of national authorities. There is no good reason to turn our backs on free flowing capital. Third, a “dynamic resilience” objective would not leave credit conditions untouched. “Dynamic resilience of the domestic banking sector” should, by contrast, be something national authorities can influence. A required increase in banks’ capital resources or liquidity during a period of exuberance would be likely to act, in degree, as a circuit-breaker on domestic credit supply. So there would be an effect on credit conditions, and so plausibly some indirect taming of the credit cycle during the upswing. And, crucially, during the subsequent downswing, the macro-prudential dial could be relaxed where necessary to lean against the risks of a perverse downward spiral. A broadly symmetric approach would be important. Its feasibility would depend on there being appropriate minimum capital requirements in the first place for normal conditions. That is part of the Basel agenda. So, on this view, the mandate or mission could be expressed in terms of ameliorating the impairment of banking system resilience that typically occurs during credit booms.
We consider that our work has been both interesting and rewarding and we hope that it has also helped some of our colleagues to make their own institutions stronger. 2  BIS Review 123/2006