Unfortunately, such episodes are not confined to recent history and occur much more frequently and have much greater economic impact than any of us feel comfortable with. Moreover, the history of crises also shows that some of these costs are persistent. Raising capital and liquidity standards will reduce the probability and impact of crises, and bring with it large benefits.
These benefits include:   avoiding both the temporary and additional permanent reductions in output and employment that occur during banking crises;    greater stability of economic output and associated increases in welfare that result from lower output volatility during non-crisis periods;    a more stable banking system that is able to withstand shocks from outside the banking sector rather than amplifying the effects of such shocks on the real economy;    lower risk premia; and    more efficient allocation of resources and the avoidance of excessive credit growth that is often allocated to certain sectors leading up to a crisis.