The costs to fix such as system can be substantial, the credit function cannot be carried out properly by such a system, and monetary policy may be hampered. Is the Global Economy Safe for Banking? Obviously, however, the record of banking crises around the globe does not prove that banking is the source of all problems.
Macroeconomic policy and the performance of policymakers also have the potential to create systemic problems. Macroeconomic conditions or policies that undergo sufficiently significant and unexpected changes impact all banks, well managed and poorly managed alike. Unfortunately, the current Asian crisis and previous bank crises, including our own, indicate that a range of macroeconomic mistakes can lead to an unsound banking system.