The Role of the State in Managing and Forestalling Systemic Financial Crises: Some Issues and Perspectives

Charles Adams
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Charles Adams: Asian Development Bank Institute

No 242, ADBI Working Papers from Asian Development Bank Institute

Abstract: This paper reviews recent state interventions in financial crises and draws lessons for crisis management. A number of areas are identified where crisis management could be strengthened, including with regard to the tools and instruments used to involve the private sector in crisis resolution (with a view to reducing the recent enhanced role of official bailouts and the associated moral hazard), to allow for the orderly resolution of systemically important financial firms (to make these firms "safe to fail"), and with regard to achieving better integration with ex ante macroprudential surveillance. The paper proposes the establishment of high level systemic risk councils (SRCs) in each country with responsibility for overseeing systemic risk in both tranquil times and crisis periods and coordinating the activities of key government ministries, agencies, and the central bank.

Keywords: global financial crisis; state intervention; macroprudential surveiilance; crisis resolution; prevention (search for similar items in EconPapers)
JEL-codes: E01 E58 G01 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2010-08-16
New Economics Papers: this item is included in nep-ban, nep-cba, nep-cta, nep-mac and nep-sea
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Citations: View citations in EconPapers (1)

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