Publication
10 Oct 2008
The credit transformation model performed by banks only works if there is confidence in the banks and, more importantly, if banks trust each other. This confidence has now evaporated and, as a result, the model fails. How to get out of this bad equilibrium? There is only one way. The governments of the major countries (US, UK, the eurozone, possibly Japan) must take over their banking systems (or at least the significant banks).
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English (PDF, 2 pages, 38 KB) |
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Author | Paul De Grauwe |
Series | CEPS Commentaries |
Publisher | Centre for European Policy Studies (CEPS) |
Copyright | © 2008 Centre for European Policy Studies (CEPS) |