Review of Plight of the Fortune Tellers: Why We Need to Manage Financial Risk Differently

Riccardo Rebonato, Plight of the Fortune Tellers: Why We Need to Manage Financial Risk Differently, Princeton University Press, 304 pages

Bank depositors need to be able to access their funds at short notice, but those who borrow from banks cannot sensibly promise to repay on demand. Bridging the gap is the risky business of "maturity transformation" - borrowing short and lending long. While the explosive growth of financial complexity is a reasonable cause for concern, among its benefits has be