[distcc] NUMBER ONE Success System

[Tommy Lee]

http://www.noss123.com/


Bank crisis

Banks are susceptible to many forms of risk which have triggered occasional
systemic crises. Risks include liquidity risk (the risk that many depositors
will request withdrawals beyond available funds), credit risk (the risk that
those who owe money to the bank will not repay), and interest rate risk (the
risk that the bank will become unprofitable if rising interest rates force
it to pay relatively more on its deposits than it receives on its loans),
among others.

Banking crises have developed many times throughout history when one or more
risks materialize for a banking sector as a whole. Prominent examples
include the U.S. Savings and Loan crisis in 1980s and early 1990s, the
Japanese banking crisis during the 1990s, the bank run that occurred during
the Great Depression, and the recent liquidation by the central Bank of
Nigeria, where about 25 banks were liquidated.[*citation needed*]

Regulation
 *Main article: Bank regulation*

Bank regulations are a form of government regulation which subject banks to
certain requirements, restrictions and guidelines, aiming to uphold the
soundness and integrity of the financial system. The combination of the
instability of banks as well as their important facilitating role in the
economy led to banking being thoroughly regulated. The amount of capital a
bank is required to hold is a function of the amount and quality of its
assets. Major banks are subject to the Basel Capital Accord promulgated by
the Bank for International Settlements. In addition, banks are usually
required to purchase deposit insurance to make sure smaller investors are
not wiped out in the event of a bank failure.

Another reason banks are thoroughly regulated is that ultimately, no
government can allow the banking system to fail. There is almost always a
lender of last resort—in the event of a liquidity crisis (where short term
obligations exceed short term assets) some element of government will step
in to lend banks enough money to avoid bankruptcy.
-------------- next part --------------
HTML attachment scrubbed and removed