This Finance survey examines (a) Financial regulators in the US and Europe lack the tools and authority to deter runs on banks by uninsured depositors; (b) Not guaranteeing uninsured deposits at Silicon Valley Bank in full would have created substantial damage to the US economy; (c) Fully guaranteeing uninsured deposits at Silicon Valley Bank substantially increases banks’ incentives to engage in excessive risk-taking
Keyword: moral hazard
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This European survey examines (a) Financial regulators in the US and Europe lack the tools and authority to deter runs on banks by uninsured depositors; (b) Not guaranteeing uninsured deposits at Silicon Valley Bank in full would have created substantial damage to the US economy; (c) Fully guaranteeing uninsured deposits at Silicon Valley Bank substantially increases banks’ incentives to engage in excessive risk-taking
This US survey examines (a) Financial regulators in the US and Europe lack the tools and authority to deter runs on banks by uninsured depositors; (b) Not guaranteeing uninsured deposits at Silicon Valley Bank in full would have created substantial damage to the US economy; (c) Fully guaranteeing uninsured deposits at Silicon Valley Bank substantially increases banks’ incentives to engage in excessive risk-taking
This week’s IGM European Economic Experts Panel statements:
A common European deposit insurance scheme, once fully implemented, would increase the stability of European economies in the event of another financial crisis.
A common European deposit insurance scheme, once fully implemented, would increase the likelihood of another financial crisis in Europe.
This week's European IGM Economic Experts Panel statements:
A) Setting the EU rules aside, and assuming it would take 2.5% of Italy’s GDP to recapitalize its banks, the Italian government would improve financial stability in Europe if it injected this amount of public funds into its banks.
B) If Italy were to inject public funds into its banks without imposing losses on at least some claimants, an important cost would be the effect on future incentives (economic or political) in Europe.
This week’s IGM Economic Experts Panel poll statements:
A) The average size of the 19 financial firms that just completed the Federal Reserve stress tests (i.e. the CCAR) would be substantially smaller if they did not have implicit government support.
B) The 19 financial firms that just completed the Federal Reserve stress tests (i.e. the CCAR) are big primarily because of economies of scale and scope, rather than because of implicit government support.
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