Pomoc ohroženým bankám - teorie, realita a měnové dopady

Assistance to Troubled Banks - Theory, Reality and Monetary Implications

Zbyněk Revenda

Politická ekonomie, 2014, vol. 2014, issue 2, 270-288

Abstract: The recent financial crisis has significantly modified the approach to helping troubled banks. The traditional role of the central bank has shifted toward non-credit forms of assistance, provided mainly by the state, and even toward assisting insolvent banks. State assistance - directly or through specialized institutions - mainly concerned banks too big to fail, i.e. systemically important banks. State aid should be forthcoming only once funds available from shareholders, owners of subordinated debt and uninsured depositors have been exhausted. Credit by a central bank should be granted only to temporarily illiquid banks. Primarily as this credit assistance can have significant monetary implications, in as much as it leads to the growth of reserves in the banking system. The impact on the economy then depends primarily on the credit activity of commercial banks. The author compares theory against practice and, using the U.S. and the EMU as an example, analyses the monetary impact using the development of money multipliers.

Keywords: money multiplier; central bank; Deposit Insurance; bank regulation and supervision; bank run; contagion risk; lender of last resort; subordinated bonds; systematically important bank (search for similar items in EconPapers)
JEL-codes: E5 G01 G21 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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DOI: 10.18267/j.polek.950

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