See, for example, Levin, Natalucci, and Piger (2004); Gürkaynak, Levin, and Swanson (2006); and Castelnuovo, Nicoletti-Altimari, and Rodriguez Palenzuela (2003). 2  BIS central bankers’ speeches  monetary policy strategy helps markets and the public understand how the central bank is likely to respond to economic and monetary developments – its so-called “reaction function”.
The TBTF problem derives from the typical response of governments confronted by the potential failure of a large bank, which is to intervene to save the bank and some of its noninsured creditors.