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What Cheap Money Means for Banks
futureofcapitalism.com
Arpit Gupta writing in Economic Polices for the 21st Century: "the Fed's decisions to provide increased amounts of liquidity and perform extraordinary operations during moments of crisis distort the incentives for banks. Instead of operating a stable capital structure and preparing for the eventuality of losses, banks can instead operate in a risky and leveraged manner –while counting on central bank provided liquidity-support in the event of a crisis."
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What Cheap Money Means for Banks
futureofcapitalism.com
Arpit Gupta writing in Economic Polices for the 21st Century: "the Fed's decisions to provide increased amounts of liquidity and perform extraordinary operations during moments of crisis distort the incentives for banks. Instead of operating a stable capital structure and preparing for the eventuality of losses, banks can instead operate in a risky and leveraged manner –while counting on central bank provided liquidity-support in the event of a crisis."
Read More...
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Arpit Gupta
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