Tools for managing banking distress: historical experience and lessons for today

Frédéric Boissay, Stijn Claessens () and Alan Villegas ()

BIS Quarterly Review, 2020

Abstract: We analyse the effectiveness of policy tools for large-scale banking distress and draw lessons for today. The depth of recessions following banking distress depends both on the speed with which tools were deployed and their type and on the macro-financial vulnerabilities. While, in general, swifter and broader-ranging policy actions mitigate such recessions, central banks' asset purchases and lending are particularly effective when banks have been underperforming or when distress follows abnormally large asset price movements, such as those triggered by the Covid19 crisis. Our analysis confirms that the recently employed policies have supported the real economy.

JEL-codes: E60 G01 G38 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (3)

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