XIV Banking System Restructuring
  • 1 0000000404811396https://isni.org/isni/0000000404811396International Monetary Fund

Abstract

Once a systemic banking crisis412 occurs, the monetary authorities must act quickly and decisively to contain the crisis and its effects on the national economy. A systemic banking crisis generally requires measures that address not only the banking system itself but also the root causes and the effects of the crisis outside the banking sector. Thus, for instance, the authorities will not only try to contain the crisis by restoring public confidence in the banking system and to preserve a minimum of essential banking services, including measures to compensate for the sharp contraction in bank credit that typically follows a banking crisis, but will also take steps to protect other parts of the financial sector, such as the capital markets, and payment and securities transfer systems.