Daily Archives: March 19, 2009

By Michael Pomerleano

We are witnessing the widespread use of guarantees, which suggests that policymakers consider them a “free lunch” permitting them to bypass budgetary scrutiny. I advocate that guarantees should be transparent, judicious and temporary and applied only in specific circumstances.

Previous financial crises have seen the use of government blanket guarantees, which are blunt instruments. Such measures for depositors and creditors were introduced in East Asia to protect banking system stability. Read more