Managing credit bubbles

Alberto Martin, Jaume Ventura, 5 July 2014



Credit markets play an increasingly central role in modern economies. Within the OECD, for instance, domestic credit has risen from 100% of GDP in 1970 to approximately 160% of GDP in 2012 (as measured by the Bank for International Settlements).

Topics: Financial markets, Macroeconomic policy
Tags: bubbles, collateral, credit, credit booms, financial accelerator, Leaning against the wind, lender of last resort

Lessons for rescuing a SIFI: The Banque de France’s 1889 ‘lifeboat’

Pierre-Cyrille Hautcoeur, Angelo Riva, Eugene N. White, 2 July 2014



In the aftermath of the 2008 financial crisis, the Dodd-Frank Act of 2010 set out to limit the authority of the Federal Reserve to rescue insolvent financial institutions.

Topics: Economic history, Financial markets
Tags: bailout, bank runs, Banque de France, central banking, Central Banks, financial crises, lender of last resort, moral hazard, SIFIs

Incentives for avoiding delayed sovereign defaults

Ugo Panizza, 3 March 2013



The international financial architecture needs a structured mechanism for dealing with sovereign defaults. The main problem with the status quo is that countries tend to sub-optimally delay necessary defaults, leading to substantial loss of value for debtors and creditors alike.

Topics: Europe's nations and regions, International finance
Tags: Eurozone crisis, lender of last resort, sovereign debt restructuring

Thanks to the ECB

Charles Wyplosz, 30 July 2012



On Thursday, the President of the European Central Bank, Mario Draghi, created a buzz by saying that the central bank “is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.” This was enough to send the euro up and bond spreads down. But what was Draghi really saying? Very smart things, in fact, for the third time.

Topics: EU policies, International finance
Tags: banking union, ECB, EU Summit, EZ crisis, lender of last resort

Procyclical bank risk-taking and the lender of last resort

Mark Mink, 31 August 2011



Since the outbreak of the global financial crisis in 2007, and particularly since the bankruptcy of Lehman brothers in September 2008, central banks in their roles as lenders of last resort have provided large-scale liquidity support not only to individual banks, but also to the banking sector as a whole. As President Trichet of the European Central Bank explained in November 2009:

Topics: International finance, Macroeconomic policy
Tags: Central Banks, financial regulation, lender of last resort

The European Central Bank as a lender of last resort

Paul De Grauwe, 18 August 2011



In October 2008 the ECB discovered that there is more to central banking than price stability. This discovery occurred when it was forced to massively increase liquidity to save the banking system. The ECB did not hesitate to serve as lender of last resort to the banking system, despite fears of moral hazard, inflation, and the fiscal implications of its lending.

Topics: EU policies
Tags: ECB, Eurozone crisis, lender of last resort

Global safety nets: The IMF as a swap clearing house

Eduardo Levy Yeyati, Tito Cordella, 18 April 2010



The emerging members of the G20 are promoting the debate on global safety nets as a key topic for the next G20 meeting. While an international lender of last resort is more appealing to these countries than conditionality-heavy IMF-led packages, its practical advantages depend critically on a number of aspects that are sometimes downplayed in the policy discussion.

Topics: Institutions and economics, International finance
Tags: central bank swaps, IMF, lender of last resort

Who should decide on emergency liquidity assistance?

Jorge Ponce, 16 January 2010



Many countries are revising their institutions to deal with troubled banks. In the UK, the Labour Party believes that the current arrangement – the Tripartite Standing Committee constituted by the HM Treasury, the Bank of England, and the Financial Services Authority – is the best framework for regulating and supervising financial institutions and wants to strengthen it.

Topics: Financial markets
Tags: banks, lender of last resort, UK

A stability pact à la Maastricht for emerging markets

Alejandro Izquierdo, Ernesto Talvi, 12 December 2009



One of the most intriguing puzzles following the Lehman debacle is that, in spite of its global nature, the current crisis dealt a much smaller blow to emerging markets than its predecessor, the Russian/Long-Term Capital Management crisis of 1998 (Levy-Yeyati 2009,

Topics: Global economy
Tags: emerging markets, global crisis, lender of last resort

Crisis Management at Cross-Roads

16 November 2009 - 1 January 1970, Auditorium, National Bank of Belgium, Brussels

SUERF/CEPS/BFF Conference followed by SUERF Annual Lecture 2009 Sessions on:
    Provision of liquidity and Lender of Last Resort operations: effectiveness, governance, cross-border and cross currency issues
    Cross-border bank resolution
    Deposit guarantee schemes: How to re-establish clients’ confidence
    Limits of the "Lender of Last Resort", "Too big to fail" and "Too big to save" theses
Followed by the 2009 SUERF Annual Lecture to be delivered by Jaime Caruana, General Manager, Bank for International Settlements Participation free of charge for members of SUERF, CEPS and the Belgian Financial Forum, non-members EUR 100
Michael Bailey
Auditorium, National Bank of Belgium, Brussels
Open attendance
More information:

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Institutions and economics
crisis management, Cross-Border Bank Resolution, Deposit Guarantee Schemes, lender of last resort

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