The problem of confidence in domestic and international banking systems

Abstract

The paper touches several points of great importance to the functioning of the domestic and international systems such as bank disappearances, loans to LDCs, rescheduling and supervision. In particular, with reference to bank disappearances, it makes a distinction between those caused by problems of liquidity and those due to problems of solvency, suggesting that only in the first case would government intervention be advisable. With regard to supervision it stresses that the public bodies and the private banks have to share the responsibility for the maintenance of confidence in the system.