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Bank System Stabilisations - Corporate Restructuring Summit
Bank System Stabilisations - Corporate Restructuring Summit

Bank Lending to Businesses in a Jobless Recovery
Bank Lending to Businesses in a Jobless Recovery

... The jobless recoveries from the 1990–1991 and 2001 recessions An economic recovery can be defined as the period of time from the official trough of the business cycle up to the date at which real GDP per capita returns to its prior peak. (There are some anomalies in using this definition; for exampl ...
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THE IMPORTANCE OF THE BANKING SYSTEM
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... issuance of bonds from the banks for a total of 155 billion euro. With the debt’s “haircut” in 2012 came the new support of 48.2 billion euro, despite the fact that the banks’ losses from the Greek bond portfolio reached 25 billion euro. If we sum all funds, the total bailout, with all the possible ...
Chapter 14
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Monetary Policy
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Fractional-reserve banking

Fractional-reserve banking is the practice whereby a bank accepts deposits, and holds reserves that are a fraction of the amount of its deposit liabilities. Reserves are held at the bank as currency, or as deposits in the bank's accounts at the central bank. Fractional-reserve banking is the current form of banking practiced in most countries worldwide.Fractional-reserve banking allows banks to act as financial intermediaries between borrowers and savers, and to provide longer-term loans to borrowers while providing immediate liquidity to depositors (providing the function of maturity transformation). However, a bank can experience a bank run if depositors wish to withdraw more funds than the reserves held by the bank. To mitigate the risks of bank runs and systemic crises (when problems are extreme and widespread), governments of most countries regulate and oversee commercial banks, provide deposit insurance and act as lender of last resort to commercial banks.Because bank deposits are usually considered money in their own right, and because banks hold reserves that are less than their deposit liabilities, fractional-reserve banking permits the money supply to grow beyond the amount of the underlying reserves of base money originally created by the central bank. In most countries, the central bank (or other monetary authority) regulates bank credit creation, imposing reserve requirements and capital adequacy ratios. This can limit the amount of money creation that occurs in the commercial banking system, and helps to ensure that banks are solvent and have enough funds to meet demand for withdrawals. However, rather than directly controlling the money supply, central banks usually pursue an interest rate target to control inflation and bank issuance of credit.
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