January 29, 2013
Deus Ex Macchiato » ‘Maintaining Confidence’ paper is up
DEM makes recommendations on how to monitor and manage large institutions, worth a read.
Pre crisis, one might have thought that:
- Banks survive if their assets are worth more than their liabilities.
Post crisis, we know that a more accurate account is
- Banks survive if investors believe that the bank’s assets are worth more than their liabilities and further believe that this state of affairs is highly likely to persist.