Policies to alleviate the balance sheet recession.
Policies to restore competition to banking for its own sake and as a means to reduce the likelihood of future financial meltdowns.
Policies to reduce the Accumulation caused by current account deficits and income concentration that minimize the potential for damage to trade volumes and wealth creation.
KeywordsFinancial Crisis Policy Option Capital Requirement Large Bank Current Account Deficit
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- 7.Former Fed governor Randall Kroszner pointed to precedent where the US government to nullified a clause in debt contracts that has become onerous. During the Great Depression, when the United States went off the gold standard, the dollar price of gold soared, which caused distress to borrowers on loans that had repayment tied to the value of gold. To alleviate borrower distress, the US government repudiated gold indexation clauses on all private contracts. At the time, gold indexation clauses appeared in almost all long-term debt contracts. Kroszner showed that the cancellation of debt led to an increase in asset values. See Randall Kroszner, Is It Better to Forgive Than to Receive? Repudiation of the Gold Indexation Clause in long-Term Debt during the Great Depression (University of Chicago, 1998).Google Scholar
- 13.See, for example, Arnold C. Herberger, “A Vision of the Growth Process,” American Economic Review, Vol. 88, Number 1 (1998): 1–32.Google Scholar
- 14.For an example of recent research on the topic of “too-big-to-fail,” which shows a negative correlation between the market to book value ration and the relative size of a bank, which indicates that size is actually value destroying, see Asli Demirguc-Kunt and Harry Huizinga, “Are Banks Too Big to Fail or Too Big to Save? International Evidence from Equity Prices and CDS Spreads,” Journal of Banking & Finance, Vol. 37, Issue 3 (March 2013): 875–894.CrossRefGoogle Scholar
- 15.Milton Friedman and Anna Jacobson Schwartz, A Monetary History of the United States, 1867–1960 (Princeton University Press, 1963).Google Scholar
- 23.See “Regulatory Capital Rules: Regulatory Capital, Revisions to the Supplementary Leverage Ratio,” Federal Register, Vol. 79, Number 187 (September 26, 2014): 57725–57751.Google Scholar
- 32.J. M. Keynes, “Proposal for an International Clearing Union,” The International Monetary Fund 1945–1965 Volume III: Documents (1969 ), pp. 19–36, available at http://imsreform.imf.org/reserve/pdf/keynesplan.pdf.
- 33.Ibid., p. 27; emphasis in the original.Google Scholar
- 34.Ibid., p. 28.Google Scholar
- 35.Ibid., p. 25.Google Scholar