Concluding remarks: practical difficulties Prompt, transparent over-capitalisation17 in a systemic crisis should remain the preferred option for dealing with failing banks that it is deemed necessary to save. Losses should be shared by both junior and senior creditors where necessary (unless the amounts involved are small) in cases where the banks are put into resolution.
Up until the summer of 2007, the relative stability of corporate-bond and sovereign spreads – interrupted only by mild turbulences during the dot-com crisis at the turn of the millennium – can be observed against the backdrop of widespread moderation in macroeconomic volatility.