ERM frameworks [7]

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Bullet points include: 2007-2009 Credit Crisis mainly a banking crisis – but note AIG. At risk of oversimplifying matters. Bank balance sheets overstretched, some business models too reliant on continued access to easy liquidity (e.g. via ‘shadow’ banking system, using repackaged loans as collateral). In hindsight, repackage structures (SIVs, CDOs etc.) were exposed to substantial liquidity risk. Crisis solved by injection of liquidity, at significant cost to public purse. Regulators/supervisors/governments keen to avoid history repeating itself

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