The Importance of Credibility in a Financial Crisis

A few years ago everybody thought that China was going to have a financial crisis you said that wasn't the case. You don't get bank runs because the banks are insolvent when I started my career I worked for one of the nine of the top 10 American banks that were insolvent but you didn't getting bank runs, he says. crises are caused by sudden stops what economists refer to as 'sudden stops' and if there's a significant mismatch between assets and liabilities then it can lead to a banking crisis. As long as the Chinese balance sheets look terrible particularly the small banks not only do they have a really awful assets but their funding base is terrible so you would think with these kind