ERM frameworks [48]

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Bullet points include: “Proposition: Distinguish: Narrow banking – classic retail and commercial banking: regulated, insured. Investment banking – risky trading activities: unregulated, unsupported in crisis. Complication: Pure investment banking firms still systemically important (Bear Sterns), Undiversified narrow banks can be risky: Northern Rock, Indy Mac, WAMU, Global economy needs complex global finance capabilities. Way forward: Not complete separation, But capital and liquidity policy constraints on risky activity, Commercial banks focused on serving customer needs”

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