News Column

The Dark And Bright Sides Of Global Banking

August 13, 2014

LONDON, Aug. 13 -- The European Union'sEuropean Bank for Reconstruction and Development issued the following news release:

This EBRD working paper by Ralph De Haas reviews the literature on the benefits and risks of global banking, with a focus on emerging Europe. It argues that while the potential destabilising impact of global banks was well understood before the 2008-09 financial crisis, the sheer magnitude of this impact in the case of systemically relevant foreign bank subsidiaries was under-appreciated.

A second lesson from the crisis is that banks' funding structure, in particular the use of short-term wholesale funding, matters as much for lending stability as does their ownership structure.

Read the Working paper in full (715KB - PDF)

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Source: Targeted News Service

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