Transparency and Ambiguity in Central Bank Safety Net Operations
Author | : Mr.Charles Enoch |
Publisher | : International Monetary Fund |
Total Pages | : 29 |
Release | : 1997-10-01 |
ISBN-10 | : 9781451930115 |
ISBN-13 | : 1451930119 |
Rating | : 4/5 (15 Downloads) |
Download or read book Transparency and Ambiguity in Central Bank Safety Net Operations written by Mr.Charles Enoch and published by International Monetary Fund. This book was released on 1997-10-01 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: To mitigate the risks of contagion from problems arising in the banking sector, many countries operate some form of banking sector safety net. Such safety nets generally involve a judicious mixture of transparency and ambiguity. This ambiguity may be important to counter moral hazard effects but may lead to excessive forbearance in the face of banking problems. While the scope for ambiguity has been declining, some ambiguity in the handling of individual institutions remains. In any case, ex post transparency is essential for reviewing the propriety of any assistance and preserving the authorities’ future reputation and policy credibility.