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Raghuram Rajan: Why The Banking Crisis Isn’t Over

Capitalisn't

CHAPTER

The Fed's Negative Effect on the Banking Sector

There were precursors of what we're seeing in the financial system today, which suggests it has a long genesis. Raghu: QE quantitative easing is when the central bank essentially buys long-term securities from the market. When banks are financing this money with short term deposits, they become very vulnerable to interest rate risk. In September 2019, all hell breaks loose in financial markets because there's not enough liquidity in the first place," he says.

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