Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/211782 
Authors: 
Year of Publication: 
1997
Series/Report no.: 
Bank of Finland Discussion Papers No. 1/1997
Publisher: 
Bank of Finland, Helsinki
Abstract: 
Systemic bank problems arise for a large number of causes and in spite of both active banking supervision and market discipline. Once a problem has emerged, swift action is needed to limit further losses, avoid financial destabilization, and regain efficient markets.The restructuring exercise is essentially microeconomic in nature, but has strong links to the development of the whole economy.Particularly important is to improve risk management in banks and support only viable banks with fit and proper governance. Government bank support is ultimately constrained by the need to safeguard government creditworthiness, and bank creditors may therefore have to carry substantial parts of the loss.Monetary policy should aim for a low and stable rate of inflation without sudden changes in interest or exchange rates, but lending of last resort should remain available at government risk.Bank restructuring is complicated by the need to simultaneously restructure important bank customers.
Subjects: 
banking crisis
bank restructuring
financial stability
government support
macro-economic policy
Persistent Identifier of the first edition: 
ISBN: 
951-686-541-0
Document Type: 
Working Paper

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