Rapid credit growth, emerging external imbalances with growing current account deficit (reaching at one point 10% of GDP), and consequently rising external debt. Price bubbles in the real estate and equity markets coupled with the expansion of the construction sector all provided red flashing lights far ahead of the 2008 global market mayhem. In order to preserve stability of the banking system throughout the crisis, resolute action had to be taken years ahead of the global financial crisis. In the period of large capital inflows, raising interest rates to tame the cycle was not a policy option due to the risk of exacerbating capital inflows even further. Therefore, already in 2003, in the early phase of the cycle, the CNB started to implement a range of measures to limit excessive lending and the increase in foreign debt, which were gradually adjusted and tightened until 2007. Stringent capital and liquidity requirements, way above and beyond anything we have available in the current macroprudential setup, were necessary in order to stem excessive risk-taking and instil resilience into the system to cope with a potential fallout. Such measures were at that time labelled (by banks and some of the colleagues) "administrative" tools, but would later be classified under macroprudential policy instruments. For example, implicit tax on credit growth (when we asked banks to subscribe zero yielding CB bonds for any  euro of credit growth over 12% per annum), and high marginal reserve requirement on foreign borrowing by banks, together with high capital requirements.
At the Federal Reserve, experience has shown that supervising large, complex banks calls for supervisors with a high level of technical expertise, the intellectual ability to make difficult specific judgments based on general principles, and the strength of character to remain open-minded but steadfast in the face of pressure from the management of supervised institutions. The accounting industry needs to be certain it is attracting people with these same attributes. As to accounting rules, one of the major issues today concerns executive stock options, as I have noted. Grants of stock options and the exercise of these grants are, as we know, disclosed in the footnotes of a firm's reports, but this information typically is not accounted for in the firm's income statement or balance sheet. Some might argue that, as long as the information on stock options is disclosed, exactly how the information is accounted for is unimportant since disclosure in and of itself is sufficient. In theory, this view may be justified. In practice, however, what we have found is that information that is disclosed but remains off the accounting statements is unlikely to be fully incorporated into the price of the stock. Another major issue with respect to accounting rules - and there is some overlap with disclosure issues here - concerns how intangible assets and complex financial transactions are treated. Intangible assets are generally thought to include a valuable trademark, a renowned reputation, or an efficient process in delivering goods or services.