We always have to take into account the costs and benefits of our measures. Assume that the supervisor, as an early intervention measure, asks the bank to draw up a capital plan. The bank might then be required to disclose this request to the markets as it shows that the supervisor is seriously concerned. This might erode trust in the bank and, in the worst case, trigger a bank run. This would bring about the very crisis that the supervisor wanted to prevent in the first place. If an early intervention measure does more harm to the bank than it does good, supervisors might be obliged not to apply the measures. Instead, they could ask for the same thing, but frame it as a standard tool. In that case, the bank would still have to draw up the capital plan, but would probably not need to disclose the request to the markets. Hence, the standard supervisory tools can be considered as less intrusive than the early intervention tools. So the overlap between the two tools should be removed. There should be a clearly defined set 3/9  BIS central bankers' speeches  of standard tools and early intervention measures and a clearly defined escalation process leading from one to the other. The second reason why it is challenging to use early intervention measures is because those measures are defined in the Bank Recovery and Resolution Directive, or BRRD. And as the BRRD is an EU directive, it has to be transposed into national law.
We are again at a similar junction. A wide array of economic indicators now suggest that growth in the U.S. has picked up and is widely expected to be around 3 percent during the second half of 2014 and in 2015. These forecasts seem quite reasonable to me and are consistent with views I have expressed in the past. Various “headwinds” have been impeding economic activity, but some of these forces have gradually subsided, allowing the substantially improved underlying fundamentals to exert themselves more forcefully. For example, fiscal restraint, which was a big factor last year, has subsided and is likely to disappear altogether next year. Credit availability has also improved, reflecting healthier bank balance sheets and improving job and income prospects for prospective borrowers. In addition, the excess supply of housing built up over the boom of the previous decade has been worked off, and both home prices and rents suggest that the supply of housing is not keeping pace with demand. This has allowed supportive financial market conditions, spurred, in part, by a very accommodative monetary policy, to shine through. As a result, aggregate household net worth has climbed relative to income and consumer balance sheets are healthier. On the business side, financial markets conditions suggest that risk aversion has subsided, leading to some firming in business investment spending. All of these developments help boost the confidence of consumers and businesses that this consensus forecast will in fact unfold.