Swedish experience II

H Cleveland FED τόσο το 2007 όσο και τον Φεβρ. 2009 σχολιάζει το σουηδικό μοντέλο:

four key principles necessary in resolving troubled financial institutions:

1. Transparency. Fully disclosing banks’ losses “clears the uncertainty surrounding the institutions and makes it possible for the viable institutions to raise new funds.”

For the U.S., of course, the extent of banks’ losses is the big mystery.

2. Political and financial independence. “If a government agency holds the purse strings, it can dictate policy and can also impede the process if emergency funding is needed,” they write.

Here, escaping political involvement entirely is a lost cause at this point.

3. Maintenance of market discipline Investors must pay the price for missing signs of trouble, they say. “As past historical examples demonstrate, the stability of financial markets after crises largely depends on the incentive framework that is left in place.”

This is where the “blanket guarantees of uninsured depositors” comes into play to skew market discipline. It’s a form of the moral hazard argument — one that’s very much being discussed amid the U.S. response, though moral hazard of course has taken a back seat at times.

4. Restoration of credit flows Getting credit moving through the economy again, they acknowledge, is “a difficult task, given that the economic fallout from a crisis (such as rising unemployment) actually erodes credit quality further.”

ο σχολιασμός είναι από τη WSJ

η εργασία της FED του 2007