Corporate balance sheets need to be de-levered and banking systems need to be restructured and recapitalized in a pro-active and timely manner, or insolvent banks and corporations will continue to be an enormous macroeconomic weight on the economy and a serious obstacle to recovery. What do emerging market economies need to do?
Some financial sector safety net appears to be essential to avoid bank runs and promote systemic stability. But, safety nets should be narrow and explicit, as opposed to broad and implicit.