There are four reasons to worry that the latest banking crisis could be systemic. For many years, periodic bouts of quantitative easing have expanded bank balance sheets and stuffed them with more uninsured deposits, making the banks increasingly vulnerable to changes in monetary policy and financial conditions.
show how the US central bank's liquidity policies created the conditions for runs on uninsured deposits.
When a bank fails, the first response by policymakers and the public is to blame risk-loving speculators, greedy investors, or regulators asleep at the wheel. But quenching our thirst for moral adjudication is a poor basis for policy, because the truth is both simpler and more troubling.
argues that recent market turmoil has revealed that the sector’s main vulnerability is unavoidable.