At VoxEU, Anne Sibert writes on “… how Icelandic banks issued “love letters” to each other – swapping their debt securities and using the other bank’s debt as collateral. This ruse ensnared not just the Icelandic Central Bank, but also the ECB – a fact that has only recently come to light. The ECB’s lack of transparency on this is a serious problem.”
The article is here.
2 replies on “Love Letters”
Topical, topical!
Reserve fractional credit. Fictional credit creation. Someone demonstrate this by modelling it for the likes of Chow and Lie, Eoin Bond and Brian O’Hanlon?
Banking is too dangerous to be allowed by wholly private partly or partially regulated (Brian Lucey note well!) organizations.
They should be highly regulated or confined to deposits of under 25,000 euro or so from individuals, not legally created persons.