Bank Failures in Mature Economies

The government recognized most of its financial liabilities towards private depositors and committed itself to paying all the frozen deposits by 2011. Nevertheless, this law was, from the very beginning, full of technical and practical difficulties. It assumed the debt conversion into bonds on a voluntary basis. The bonds were issued in paper format and thus were liable to forgery and theft. The non-electronic format of bonds proved to be complicated for trading and clearing procedures as well. Finally, the law was financially based on GDP growth levels that were unattainable at that time. This ambitious but unrealistic attempt to pay frozen private deposits turned out to be.

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