Blanket Guarantees

The expansion of deposit insurance and introduction of debt guarantees have played a crucial role in containing the financial crisis while giving governments time to develop suitable policy responses. But these measures do not address the root caus...

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Bibliographic Details
Main Authors:	Feyen, Erik, Vittas, Dimitri
Format:	Brief
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ACCESS TO FUNDS ACCESS TO INSURED DEPOSITS ASSETS ASSOCIATION OF DEPOSIT INSURERS BANK ACCOUNTS BANK BRANCHES BANK DEBT BANK DEPOSITS BANK FAILURE BANK HOLDING BANK HOLDING COMPANIES BANK LIABILITIES BANK PERFORMANCE BANK RUN BANK RUNS BANKING CRISES BANKING CRISIS BANKING INDUSTRY BANKING SUPERVISION BANKING SYSTEM BANKING SYSTEM STABILITY BANKING SYSTEMS BANKRUPTCY BASIS POINTS BLANKET GUARANTEES BONDS CAPITAL ACCOUNT CAPITAL FLOWS CAPITAL OUTFLOWS CDS CERTIFICATES OF DEPOSIT COINSURANCE COMMERCIAL BANKS COMMERCIAL PAPER COMMITMENT DEVICES CONTAGION CONTINGENT LIABILITIES COVERAGE ARRANGEMENTS COVERAGE CEILING COVERAGE OF DEPOSIT COVERAGE OF DEPOSIT INSURANCE CREDIBILITY CREDIBILITY OF DEPOSIT INSURANCE CREDIT DEFAULT CREDIT DEFAULT SWAP CREDIT EXPANSION CREDIT GUARANTEE CREDIT GUARANTEE SCHEME CREDITOR DEBT GUARANTEE DEBT GUARANTEES DEBT ISSUANCE DEBT ISSUES DEBT MARKETS DEFAULT RISK DEPOSIT DEPOSIT COVERAGE DEPOSIT INSURANCE DEPOSIT INSURANCE ARRANGEMENTS DEPOSIT INSURANCE CORPORATION DEPOSIT INSURANCE COVERAGE DEPOSIT INSURANCE DESIGN DEPOSIT INSURANCE INCREASE DEPOSIT INSURANCE SCHEMES DEPOSIT INSURANCE SYSTEMS DEPOSIT LOSS DEPOSIT PROTECTION DEPOSIT PROTECTION SCHEME DEPOSITOR DEPOSITOR LOSSES DEPOSITS DESIGN OF DEPOSIT INSURANCE DOMESTIC BANKING DOMESTIC BANKS DOMESTIC CREDIT DOMESTIC LIQUIDITY EFFECTIVE DEPOSIT INSURANCE EFFECTIVENESS OF DEPOSIT INSURANCE EMERGING ECONOMIES EXCESSIVE RISK EXCHANGE RATE EXISTING DEBT EXPLICIT DEPOSIT EXPLICIT DEPOSIT INSURANCE EXPLICIT DEPOSIT INSURANCE SCHEME EXPLICIT DEPOSIT INSURANCE SCHEMES FAILING BANKS FEDERAL DEPOSIT INSURANCE FEDERAL DEPOSIT INSURANCE CORPORATION FEDERAL HOME LOAN FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL INSTITUTIONS FINANCIAL INTEGRATION FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL REFORMS FINANCIAL SAFETY FINANCIAL SAFETY NET FINANCIAL SAFETY NETS FINANCIAL SYSTEM FISCAL RESOURCES FORBEARANCE FOREIGN BANK FOREIGN BANKS FOREIGN BRANCHES FOREIGN CURRENCY FOREIGN CURRENCY DEPOSITS FOREIGN EXCHANGE FOREIGN EXCHANGE RESERVES FOREIGN LIABILITIES FULL BLANKET GUARANTEES FUTURE FINANCIAL CRISES GOVERNMENT GUARANTEES GOVERNMENT INTERVENTIONS GOVERNMENT SUPPORT HIGHER DEPOSIT RATES HOME LOAN HOME LOAN BANKS HOST COUNTRY INCENTIVE OF DEPOSITORS INDIVIDUAL BANKS INDIVIDUAL DEPOSITORS INSOLVENT INSTITUTIONAL CAPACITY INSTITUTIONAL INVESTORS INSTRUMENT INSURED BANK INSURED DEPOSITS INVESTOR CONFIDENCE JUNIOR DEBT JURISDICTIONS LARGE BANKS LARGE DEPOSITORS LAST RESORT LENDER LENDER-OF-LAST-RESORT LENDER-OF-LAST-RESORT FACILITIES LEVEL PLAYING FIELD LIQUIDATIONS LIQUIDITY LIQUIDITY SUPPORT LOCAL BANKS MARKET CONDITIONS MARKET DISTORTIONS MARKET PARTICIPANTS MATURITIES MATURITY MONETARY FUND MONEY MARKET MORAL HAZARD MORAL HAZARD PROBLEM MORTGAGE MORTGAGE LENDING MUTUAL FUNDS NONBANK FINANCIAL INSTITUTIONS OUTSTANDING BALANCES POLICY RESPONSES PRIVATIZATION PUBLIC FUNDS PUBLIC POLICY PUBLIC SECTOR DEBT RATE OF EXCHANGE RECESSION REGULATORY FRAMEWORK REGULATORY FRAMEWORKS RETURN RISK PROFILES RISK-BASED PRICING SAVINGS SENIOR DEBT SHORT-TERM DEBT SMALL DEPOSITORS SOLVENCY SOLVENT SOLVENT BANKS SOVEREIGN DEBT SOVEREIGN DEBT MARKETS STRUCTURE OF DEPOSIT SUBORDINATED DEBT SUBSIDIARIES SUBSIDIZATION TIER 1 CAPITAL TRADITIONAL DEPOSIT TRANSACTION TRANSACTION ACCOUNTS UNDERLYING ASSET UNINFORMED DEPOSITORS UNION UNLIMITED PROTECTION UNSECURED BONDS UNSECURED DEBT WEAK BANKS WHOLESALE FUNDING WITHDRAWAL
Online Access:	http://documents.worldbank.org/curated/en/2009/06/11092340/blanket-guarantees http://hdl.handle.net/10986/10248

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Summary:	The expansion of deposit insurance and introduction of debt guarantees have played a crucial role in containing the financial crisis while giving governments time to develop suitable policy responses. But these measures do not address the root causes of the crisis, and they lead to competitive distortions, moral hazard, and large fiscal contingent liabilities. Rolling them back is likely to require an internationally coordinated effort and an answer to the important question, 'exit to what?'

Blanket Guarantees

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