The Icelandic and Irish Banking Crises
Alternative Paths to a Credit-Induced Collapse
By David Howden
Central banks set the stage for financial collapse through excessive credit expansion, but a lax monetary policy isnt the only way that policymakers can foster a meltdown. As the recent banking crises in Iceland and Ireland illustrate, a faulty deposit insurance system and a poorly managed accession to the currency union can make matters worse.
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