It believes the continuing lack of credit is the main problem, appearing to hold the financial sector responsible for the main issues holding back a recovery.
It says: “… But, the ability of banks to perform their essential function of lending to the real economy is still impaired and deleveraging of banks, other financial institutions and households is exerting deflationary pressure on the real economy, making the scale and length of the economic downturn very difficult to predict.”
It goes on: “Macroeconomic and financial system risks have become more closely interconnected than in previous years. The future health of the financial system will be critically influenced by the pattern of economic growth or contraction, and therefore the severity of credit losses arising in the real economy. But, to a far greater extent than in any other recent economic downturns, real economic developments are in turn likely to be affected by the ability of the banking system to maintain lending.”
