IMF paper quantifies structural subsidies for Sifis

IMF headquarters in Washington DC

A working paper, published by the International Monetary Fund in May, presents an estimate of the value of the structural subsidy implied by bailout expectations for systemically important financial institutions (Sifi).

The authors, Kenichi Ueda and Beatrice Weder di Mauro, use expectations of state support embedded in credit ratings to produce an estimate of the daily funding cost advantage to banks with a high likelihood of support. They estimate the average cost advantage to have been 60

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