Dynamics of Modern Banking and Credit Challenges

This chapter examines recent developments in the banking system, focusing on credit creation, delinquencies, and a notable preference for purchasing government bonds. It discusses the disparity in credit availability for small businesses compared to larger corporations, and highlights the complexities and risks associated with private credit and collateralized loan obligations (CLOs). The dialogue underscores the evolving landscape of financial intermediation and the potential vulnerabilities in non-bank financial systems, reflecting on the challenges faced by regional banks and the implications for economic stability.