Government Backed Insurance Of Extreme Systemic Risk
Source: City University of London (Cass)
Governments' worldwide have recapitalised their banks, but this has not been enough to persuade banks to lend again. Despite large interest rate reductions the supply of credit to households and corporations continues to fall. A view now gaining ground is that in order for banks to have the confidence to increase their lending, they need further support in the form of a government backed insurance against extreme systemic losses.