Peaks in the financial cycle are closely associated with systemic banking crises (henceforth “financial crises” for short). In the sample of seven industrialised countries noted above, all the financial crises with domestic origin (ie, those that do not stem from losses on cross- border exposures) occur at, or close to, the peak of the financial cycle. And the financial crises that occur away from peaks in domestic financial cycles reflect losses on exposures to foreign such cycles. Typical examples are the banking strains in Germany and Switzerland recently. Conversely, most financial cycle peaks coincide with.
