From the asset side, the principal risk faced by banks is on the credit side. This can incorporate mortgages that don't stay current, credit cards that don't stay current, commercial loans. All of these areas are going to be affected by the very sharp economic downturn we are currently experiencing.
From our perspective, as the questioner mentioned, we have been concerned for some time about elevated levels of indebtedness both at the household and corporate level. We don't pretend to have anticipated the pandemic, but we're always planning for a severe and prolonged recession. We want to make sure the individual institutions and the system as a whole are able to navigate through that. The principal, but by no means only, method that we use to do this is by making sure that capital levels, so the loss-absorbing capacity in institutions, are at quite a high level, which allows them to confidently navigate through a severe and prolonged recession.
We need to be prepared to see bank results we haven't seen for some time because we've gone through a very long, benign credit period, one of the longest and most benign periods of credit performance in Canadian history. We at OSFI, and in the financial sector, have not taken that for granted and have not assumed it will continue. We have prepared for the eventuality that it would not.