A term that emerged in the financial world in 2008, meaning that the state comes to the aid of failing banks. – The rescue packages put in place by the governments of individual countries in the wake of the financial crisis that erupted with the subprime crisis in 2008 basically contained three instruments, namely – assumption of guarantees, – recapitalization of institutions with voluntary or mandatory participation, and – assumption of risk positions. However, there was also a realization that case-by-case bailouts alone were not sufficient to address an increasingly systemic financial crisis. – According to IMF estimates, the industrialized nations spent a good thirty percent of gross domestic product on capital injections, bailout purchases, guarantees and the provision of liquidity to smooth the financial crisis. – This was also said of the aid provided by the ECB, the IMF and other states and institutions to some EMU countries heading for national bankruptcy. – Politicians alone have the democratic legitimacy to put together rescue packages. However, when monetary policy steps in here, the result is that fiscal policy does not act at all or acts too late. – See resolution mechanism, unified, bad bank model, German, bank bail-in, reverse, bank bail-in law, bazooka, blackmail potential, European Financial Stabilization Facility, European Monetary Union, fundamental error, exit strategy, ECB sin, financial market stabilization agency, Friedman thesis, creditor priority, Greece crisis, Ireland crisis, mandatory convertible bond, Portugal crisis, private sector involvement, restructuring law, bailout, bailout Europeans, bailout routine, risk takers, final, debt club, Sifi oligopoly, stability fund, European, southern front, Tina, too big to save principle, transfer union, Troika, growth-debt fact, historical, growth forces mobilization, zombie bank, forced convertible bond, two-way option, Cyprus crisis. – Cf. ECB Monthly Report of December 2008, pp. 81 et seq. (basic facts on rescue packages in times of crisis), Deutsche Bundesbank Monthly Report of December 2008, pp. 8 et seq. (key elements of the German government’s stabilization program), ECB Monthly Report of March 2009, pp. 84 et seq. (basic facts on rescue packages).
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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
https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk
https://www.jung-stilling-gesellschaft.de/merk/
https://www.gerhardmerk.de/