A schematic view of government as regulator and insurer of the financial system

Henri-Paul Rousseau (1, 2)

1 PSE - Paris School of Economics
2 PJSE - Paris Jourdan Sciences Economiques

The purpose of this paper is to present a schematic of the interactions between the government as the REGULATOR of financial institutions and the government as the INSURER of financial institutions while taking into account the long-term feedback relationships between the size and the scope of the financial sector and the level of public debt resulting from financial crises over time. The analysis concludes that at certain high level of public debt and size of the expected support of the financial sector by the government, the regulator and /or the central bank may have to “stabilize” the situation, but there may be cases where the support becomes socially “unacceptable.”

Domaines: Economies et finances

Henri-Paul Rousseau. A schematic view of government as regulator and insurer of the financial system. 2019. ⟨halshs-01993612⟩