Interbank lending

By Viral Acharya, David Backus, and Raghu Sundaram  

There is a tendency in a crisis to throw out the rulebook: we are in a unique situation, some will say, and that calls for unique measures. In fact, financial crises are recurring events whose history has taught us some clear lessons. Read more

By Mark Carney

Our response to the financial crisis will be as important as the event itself. We can never eliminate financial crises, but we can reduce their likelihood and severity. Read more

By Nariman Behravesh

The full fury of the two shocks that have hit the world economy – the financial crisis and record oil prices – is beginning to dissipate. Unfortunately, the full impact of these shocks on the real economy has yet to be felt. Read more

By Jon Danielsson and Casper de Vries

Neither the recent massive money market injections, the coordinated lowering of interest rates nor the use of public funds to recapitalise banks have done much to restart interbank lending. This action did not solve the underlying problem preventing interbank lending: extreme information asymmetry. Read more