French paper quantifies cost of implicit bank insurance
A Banque de France working paper, published today, employs two methodologies – one using microeconomic data, another macroeconomic – to gauge the cost of a systemic banking crisis.
The paper – Fiscal Sustainability in the Presence of Systemic Banks: the Case of EU Countries, by Agnès Bénassy-quéré and Guillaume Roussellet – attempts to include the "off-balance sheet, implicit insurance" given to systemically important financial institutions (Sifis) into an assessment of fiscal sustainability for
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