Moreover, troubles in one institution may rapidly amplify and spread to others through balance sheet interlinks and financial contagion, and affect the payment systems and the real economy (see, for instance, Allen and Gale 2000, Diamond and Dybvig 1983, Freixas et al. 2000. Ponce and Tubio 2010 offer a review of the literature).
In addition to these externalities, amplification and spill-over effects, a situation of financial instability may be the result of the materialization of a macroeconomic risk which is common to all financial institutions (see Rochet, 2004). Yet, financial institutions may face difficulties to coordinate actions in order to resolve potentially damaging imbalances.