The financial system is like plumbing: when it works, we take it for granted. But when it breaks, watch out. If people lose faith in banks and financial markets, they will rush to low-risk alternatives, and intermediation will stop. Savers will not want to lend and borrowers will not be able to borrow. Getting a car loan or a home mortgage becomes impossible, as does selling a bond to maintain or expand a business. When the financial system collapses, economic activity does too.
As one of the app
- A route to economic growth – The Belt and Road Initiative 2018 survey
- Policymakers should act now to prevent next crisis – IMF panellists
- The Bank of Italy’s approach to risk-based budgeting
- Fintech in the ‘new era’ – Sustainable and sound development
- China’s macroeconomy in the ‘new era’ of politics and power