Origins and deregulation of geographic restrictions in the United States Restrictions on the geographic expansion of banks have a long history in the United States. Because the U.S. Constitution prevents states from issuing paper money and from taxing interstate commerce, the states used their power to grant bank charters to generate a substantial part of state revenues (Sylla, Legler, and Wallis, 1987).
Country’s with high concentration in one or two sectors often face risks to financial sector, if there is an over-exposure of the system to these sectors. Similarly, macroeconomic imbalances introduce economic vulnerabilities which in turn induce inflationary pressures and/or exchange rate volatility. These factors do pose system wide challenge to financial stability. 21.