But in the aggregate fire sales and the concomitant shedding of exposures cause a systemic failure which can damage institutions that would be healthy in different macro-environments. 2  Stein (2011). 3  Maddaloni and Peydró-Alcalde (2010). 4  Jiménez, Ongena, Peydró and Saurina (2010).
2  BIS central bankers’ speeches  In a simple institutional environment, this externality could be addressed with conventional monetary policy, complemented with either deposit insurance or a lender-of-last-resort facility, acting ex post. But for policy-makers to intervene ex post is sub-optimal and exceedingly reliant on instruments whose effectiveness in distress conditions is subject to a great deal of uncertainty.