Calling the Big Banks’ Bluff

Calling the Big Banks’ Bluff

The G-20’s decision not to let any systemically relevant bank perish may have seemed wise at the time, given the threat of a global financial meltdown. But that decision has given over-indebted major banks the power to blackmail their rescuers – a power that they have used to create a financial system in which they are effectively exempt from liability.Big banks’ ability to extort such an arrangement stems from an implicit threat: the financial sector – and with it the economy’s payment system – would collapse if a systemically important bank were ever pushed into insolvency.

Weiterlesen bei Project Syndicate

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