Acceso usuarios
How does the management and resolution of the current crisis compare with the response of the Nordic countries in the early 1990s, widely regardes as exemplary?We argue that, whilw intervention has been prompter, the measures taken so far remain less comprehensive and in-depth. In particular, the cleansing of balance sheets has proceeded more swoly, and less attention has been paid to reducing excess capacity and avoiding competitive distorsions. In general, policymakers have given higher priority to sustaining aggregate demand in the short term than to encouraging adjustment in the financial sector and containing moral hazard. We argue that three factors largely explain this outcome: the more internatonal nature of the crisis; the complexity of the instruments involved; and, hardly appreciated so far, the effect of accounting practices on the dynamics of the events, reflecting in particular the prominent role of fair value accounting (and mark to market losses) in ralation to amortised cost accounting for loan books. there is a risk that the policies followed so far may delay the establishmentof the basis for a sustainably profitable and less risk-prone financial sector.
