risks should be based on a framework that accounts for the various linkages between the banks and the other relevant … financial market actors, notably investment funds. Given that the bulk of the banks in Luxembourg are affiliates of foreign bank … groups, the authorities should seek clear procedures that govern the (cross-border) resolution of large banks in bad times …

stochastic policy mix lead to suboptimal allocations if banks do not internalize insolvency costs. The policy of forbearance may … make banks internalizing such costs and improves the efficiency of intermediation. …