We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
The return of the credit cycle: old lessons in new markets.
- Abstract
In this speech, Sir John Gieve, Deputy Governor for financial stability, highlights the return of the credit cycle and how some old lessons have re-emerged in the new credit markets. He notes that as in previous banking cycles, a period of strong growth, low interest rates and rapid increases in asset prices lead to overconfidence and bad lending at the top of the cycle; defaults, deleveraging and retrenchment follow in the downswing. But the way this old story has unfolded through the new credit markets has sprung some unpleasant surprises, including the speed with which losses in just one market in one country - the housing market in the United States - have disrupted wider credit markets in all advanced economies. After analysing the events of the past seven months, he concludes that authorities need to consider again how far the regulatory regime for capital and liquidity can be made countercyclical, to create a system which raises requirements as the boom gathers pace in order to dampen the upswing and create additional headroom for losses as the cycle turns - if this is not possible an alternative may be to require larger capital and liquidity buffers across the whole cycle.
- Subjects
UNITED Kingdom; CREDIT ratings; INTEREST rates; MONETARY policy; HOUSING market; INTEREST rate swaps; EMERGING markets
- Publication
Bank of England Quarterly Bulletin, 2008, Vol 48, Issue 1, p91
- ISSN
0005-5166
- Publication type
Article