To Err Is Human: Rating Agencies And The Interwar Foreign Government Debt Crisis
The authors compare the banking crises in 2008-09 and in the Great Depression, and analyze differences in the policy response to the two crises in light of the prevailing international monetary systems. The scale of the 2008-09 banking crisis, as measured by falls in international short-term indebtedness and total bank deposits, was smaller than that of 1931. However, central bank liquidity provision was larger in 2008-09 than in 1931, when it had been constrained in many countries by the gold standard. Liquidity shortages destroyed the international monetary system in 1931.