Crisis burden sharing program

An agreement, made in advance and known to all parties, on how to share losses incurred in the event of a financial crisis. Advocated by some as a measure of prudent, forward-looking policy, rejected by others as a flagrant invitation to careless behavior. – Internal and confidential (i.e., not published and known in detail only to a small circle) emergency programs that authorities – government, central bank, regulator – have shelved for such crises. – The intended or actual burden on individual economic agents in the wake of a crisis. In Germany, for example, savers had to bear a large part of the burden – according to reliable calculations, about 36 billion euros per year – by way of a diet yield (extremely low interest rate for bank deposits) to cope with the financial crisis that followed the subprime crisis. – See banking crisis, crash, contingent loss, financial crisis, financial stability report, crisis plan, London procedure, models, monetary policy, model uncertainty, moral hazard, risk-bearing capacity, shock management, single master liquidity conduit, stress test, loss-sharing arrangement, worst case scenario.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
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