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This has explicit government support.
Even so, explicit government supportmay still be needed.
Rather, they did so because social norms and explicit government pressure encouraged them to do so.
And banking systems are incredibly reliant on implicit or explicit government support.Banks first.
The moral hazard in banking (caused by implicit or explicit government guarantees of deposits) makes proper oversight essential.
Given the explicit government guarantee behind the banking system, central banks need to monitor both financial stability and asset prices.
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Though maybe that should be the cost of their now-explicit government guarantee.
Other creditors now enjoy a near-explicit government guarantee too.It is not just guarantees which make deposits special.
The company's senior debt, with its near-explicit government guarantee, remains triple-A rated.UBS, one of the biggest victims of the credit crunch, opened an old can of worms by announcing that it would run its investment bank separately from its wealth-management and asset-management arms.
Its bond holdings of government-sponsored enterprises, estimated by credit rating agencies at $340 billion, rose in value by billions of dollars in a single day when the Bush administration made explicit the government guarantee of Fannie Mae and Freddie Mac bonds, causing their interest rate spreads compared with Treasury bonds to narrow by 5 to 35 basis points within hours.
The implicit -- some say explicit -- government guarantee enjoyed by TBTF banks is one of the hidden public subsidies conferred by the government's intervention in the financial markets.
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