Some people do not like to deposit their money in banks.

There were similar fears recently when it became known that US based money market funds had lent heavily to European banks. And some leading US banks also rely on money market funding here, too, the shadows and the banks have aligned interests.

Rather than imposing the costs of the ECB s and EFSF s losses on European taxpayers, the banks creditors could give up some of their claims in exchange for receiving shares from the banks owners. Debt equity swaps rescue the banks without rescuing their shareholders.

There are many subtleties in how governments and central banks should attempt to accomplish these steps. And, indeed, the North Atlantic region s governments and central banks have tried to some degree.

Economy downturn incomes fall some people can t repay mortgages banks sell defaulted houses at low prices house prices fall more people stop paying home mortgages banks sell houses again prices fall again ...

Mortgage banks kept some claims on their books, but sold most of them to investment banks as mortgage backed securities. The investment banks blended these securities into asset backed securities and collateralized debt obligations (CDOs) and sold them on to financial institutions throughout the world.

The State Prosecutor indicted, tried and secured convictions of some persons implicated in the illicit operations of these banks.

Debt equity swaps would be a much better way to recapitalize the banks. Rather than imposing the costs of the ECB s and EFSF s losses on European taxpayers, the banks creditors could give up some of their claims in exchange for receiving shares from the banks owners.

Excessive focus on inflation meant that some central banks ignored what was happening to their financial markets. The costs of mild inflation are miniscule compared to the costs imposed on economies when central banks allow asset bubbles to grow unchecked.

The ECB should have done some thinking before it let this state of affairs arise. Indeed, more than thinking, it should have done some regulating to prevent Europe s banks from becoming so vulnerable.

Finally, some object that bankers dominate the boards of directors of the regional Reserve Banks, making it seem that the foxes are guarding the henhouse.

There was also bureaucratic resistance from existing regulators. Most important, supervision suggested some potential responsibility to recapitalize problematic banks, and thus involved a fiscal cost.

In some States individuals may be permitted to operate such systems, whereas in others only incorporated entities may act as banks or non bank financial institutions.

The crisis that began in 2007 originated in the sub prime mortgage sector in the United States, and in US banks that were too big to fail, prompting many observers at the outset to predict the end of American financial capitalism. But the banks that were most affected were elsewhere, and the long term winners will be a few American banks including some of the most notoriously weak banks which will get bigger as a result of the crisis.

It certainly rescued many commercial banks, whose exposure toward the Greek state was substantial by the first quarter of 2010. Greek banks had lent most to the Greek government ( 29 billion), followed by French banks ( 20 billion), German banks ( 17 billion), and US banks ( 4 billion).

Some Parties considered the following measures establishment of seed banks and identifying least cost measures, such as switching crops and or cultivars, soil improvement, and rainwater management.

Taming Europe s Banks

US banks and broker dealers are exposed to about half of this figure, or 1.8 trillion the rest is borne by other financial institutions in the US and abroad. The capital backing the banks assets was only 1.4 trillion last fall, leaving the US banking system some 400 billion in the hole, or close to zero even after the government and private sector recapitalization of such banks.

The problem is that banks continue to offer big mortgages while having little of their own skin in the game. The IMF estimates that the average mortgage risk weight in Europe and Asia was 14 and 15 , respectively, with some banks using a risk weight as low as 6 .

Debt write downs and guarantees will inevitably bloat Germany s government debt, as the authorities are forced to bail out German banks (and probably some neighboring countries banks). But the sooner the underlying reality is made transparent and becomes widely recognized, the lower the long run cost will be.

But, although the United States and some European countries have gone a long way toward restoring the lending capacity of banks, that may not be enough. After all, if the economy is to grow again, banks need borrowers, but the recession has led entrepreneurs to cut their investments.

European banks could bulk up in large part because it was assumed that their respective governments backed them. Not only are these banks now large relative to some national economies, but the quality of government credit is now in question across the eurozone periphery up to and including Italy.

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Some funding has also come from regional development banks, the European Commission, the United States Federal Aviation Administration and the private sector (Airbus, the Boeing Company and General Electric).

First, a common institution, the European Central Bank, had the power to act. Second, member states relinquished some control over their banks, in order to boost the system s overall stability.

This document focuses on some of the mechanisms that banks can use in developing an effective customer identification programme and is designed to support implementation of the 2001 CDD paper.

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The conventional narrative comforting to the big banks and their friends in the Obama administration is that the Treasury has done everything within its power to reform the system. In this account, anyone now complaining about, for example, the lack of legal charges against the banks is some form of dangerous demagogue.

Sending money to some countries is now allowed only through formal banking channels, and this has created virtual monopolies while also preventing remittance money from reaching rural areas where banks don t operate. In West Africa, a simple money transfer operator now handles 70 of official payments and also imposes exclusivity on banks.

To avoid an additional credit crunch as banks deleverage, banks should be given some short term forbearance on capital and liquidity requirements. Also, since the US and EU financial systems remain unlikely to provide credit to small and medium size enterprises, direct government provision of credit to solvent but illiquid SMEs is essential.

This is the historical analogy drawn by those who want governments to do more, particularly banks that feel vulnerable and desperately need a public bailout. In August 2007, some German banks, at the earliest signs of difficulty because of their exposure to US sub prime mortgages, started to talk only of 1931.

In some States where money or value transfer services are allowed only to institutions licensed or registered as banks, alternative remittance systems are automatically an illegal and underground form of banking.