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Full-Text Articles in Economic Policy
Mexico: Fobaproa Blanket Guarantee, 1993–1994, Stella Schaefer-Brown
Mexico: Fobaproa Blanket Guarantee, 1993–1994, Stella Schaefer-Brown
Journal of Financial Crises
On December 22, 1994, the Mexican government allowed the peso to float freely against the US dollar, aggravating the run on peso deposits, leading to the rapid devaluation of the peso, and sparking the peso crisis. The following week, the Bank of Mexico announced that the Mexican deposit insurer would fully guarantee all commercial bank deposits and liabilities except subordinated debt. The announcement of the blanket guarantee appeared effective at reassuring foreign investors, as the central bank was soon able to ease the liquidity support that it had been providing to banks during the crisis. The government created a deposit …
Sweden: Bank Support Authority, Blanket Guarantee, 1992, Anmol Makhija
Sweden: Bank Support Authority, Blanket Guarantee, 1992, Anmol Makhija
Journal of Financial Crises
Following a period of rapid financial liberalization and a record credit boom in the 1980s, Sweden’s financial system suffered its worst shock in the post–World War II period. Swedish banks were heavily dependent on foreign credit, which dried up amid signs of instability. The Swedish government announced a blanket guarantee on September 24, 1992, for all banks’ obligations except share capital and perpetual subordinated loans. According to a 1995 IMF Working Paper by Drees and Pazarbasioglu, the purpose of the blanket guarantee was “to guarantee the stability of the payments system and to safeguard the general supply of credit.” The …
Finland: Government Guarantee Fund, Blanket Guarantee, 1992, Anmol Makhija
Finland: Government Guarantee Fund, Blanket Guarantee, 1992, Anmol Makhija
Journal of Financial Crises
Following a period of rapid financial liberalization and a record credit boom in the 1980s, Finland’s financial system suffered steadily increasing loan losses and falling earnings beginning in 1990. The Finnish Parliament created the Government Guarantee Fund (GGF) in April 1992 to support banks with loans, capital, and guarantees. In a press release issued on August 6, 1992, the government said the GGF would “secure the stable functioning of the banking system under any circumstances [emphasis added]”. Six months later, the Parliament of Finland specifically required the GGF to guarantee that all Finnish banks could meet their commitments. The government …