Publication: 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 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?'
“Feyen, Erik; Vittas, Dimitri. 2009. Blanket Guarantees. Crisis Response Note; No. 4. © World Bank, Washington, DC. http://openknowledge.worldbank.org/entities/publication/db3f8763-8223-5dd3-8a07-9991339bb6a2 License: CC BY 3.0 IGO.”