Big banks, not small banks, are the major players in the market for short term debt, which makes their bonds riskier than small banks bonds.

Some French banks traders openly boast of backing by the French government, which will never let its banks fail.

The experience was a lesson for banks, regulators, central banks, and treasuries, which, not surprisingly, were unprepared to handle a comprehensive crisis.

Banks

The amount of non performing loans on which the commercial banks still retain claims remains significant, though the viability of commercial banks are no longer threatened.

At the same time, emerging market central banks need to accumulate gold reserves, which they still hold in far lower proportion than do rich country central banks.

But the banks that were most affected were elsewhere, and the long term winners will be a few American banks including some of the most notoriously weak banks which will get bigger as a result of the crisis.

It created so called Central Bank Bills, which commercial banks are supposed to buy voluntarily.

Eastern Europe has its problems, which are likely to impact Western Europe s highly leveraged banks.

The banks.

When banks stopped providing short term liquidity to other banks and industrial companies, central banks filled the gap.

The experience was a lesson for banks, regulators, central banks, and treasuries, which, not surprisingly, were unprepared to handle a comprehensive crisis. Their tools and powers were lacking.

When the Fed buys Treasury bonds or other assets like mortgage backed securities, it creates reserves for the commercial banks, which the banks deposit at the Fed itself.

This is a matter of considerable importance to central banks, which value liquidity when deciding which currencies to hold as reserve.

CAMBRIDGE America s long controversial Glass Steagall Act of 1933, which separated deposit taking commercial banks from securities trading investment banks in the United States, is back in the news.

How to Bail out Good Banks and Let Bad Banks Fail

They don't need banks. They got no money in the banks.

This may result in extra reserves, which commercial banks cannot use to extend their credit lines.

Development banks, which provide loans to developing countries, are an important source of multilateral population assistance.

Taming Europe s Banks

Europe s Naked Banks

Europe s Zombie Banks

Banks and cash

Regional development banks

in banks payment

Instead, banks were obliged only to take equity injections from the government, which they consider politically toxic.

The banks then dump the IOUs on the European Central Bank, which then provides the actual cash.

First, it promises more effective risk management, because large banks are less exposed to a single sort of customer (in contrast to rural American banks, which suffered when American farmers suffered).

In Europe, the banks wounds must be closed weak banks must be shut down or merged with stronger banks before recovery can begin.

American banks have incurred more than half of these massive penalties. The European bill amounts to just over 100 billion roughly half of which was paid by the top seven British banks.

To be sure, they will help to prevent banks from using instruments resembling collateralized debt obligations (which banks use to repackage individual loans for placement on secondary markets) to reduce their exposure.

There is little chance that banks will re lend to these non banks the funds they borrowed from central banks, given these banks own severe liquidity problems and mistrust of non bank counterparties.

The bad loans, in turn, have created massive holes in banks balance sheets, which have to be repaired.

Furthermore, why do small banks, which have no implicit backing from the government, also have so much leverage?

But this ignores the fact that Steagall was not enamored of more extensive branching, which disadvantaged small banks.

Such tactics, in which banks are nudged, not coerced, into investing in government debt, constitute soft financial repression.

Layla was robbing banks.

Layla was robbing banks.

Big Banks Shadow Dance

Britain nationalizes its banks.

Consider large Western banks.

German Banks on Top

Japan s banks followed suit.

Of Banks and Bailouts

Are China s Banks Next?