Cross-Cutting Themes in Economies with Large Banking Systems
Policy Papers, April 16, 2010
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Bibliographic details
- Published: April 16, 2010
- Series: Policy Papers
Overview
- Purpose: Examines cross-country perspectives on economies with large banking systems relative to GDP, focusing on links between the health of the financial system and sovereign sustainability.
- Scope: Excludes off-shore centers because their international links tend to be relatively unrelated to domestic activities.
- Publication date: April 16, 2010.
- Accessed date in citation: 9/18/2026.
- Context: Highlights that such economies tend to have domestic institutions with major foreign currency cross-border activities.
Featured Case Studies
- Five economies analyzed: Hong Kong SAR, Iceland, Ireland, Singapore, and Switzerland.
- Additional analytical box: Benelux region.
- Common characteristic: These economies had large and relatively diversified international banking sectors compared to their fiscal capacity before the global financial crisis of 2007–09.
- Empirical approach: Draws on experiences and divergent outcomes over the global financial crisis of 2007–09.
- Engagements: Interviews with a range of private and public sector individuals during missions to Belgium, Hong Kong SAR, Ireland, Singapore, Switzerland, and the United Kingdom.
Key Findings and Analysis Themes
- Principal linkage: Strong links are generated between the health of the financial system and sovereign sustainability in economies with large banking systems relative to GDP.
- Diversification versus fiscal capacity: The examined economies combined large, relatively diversified international banking sectors with limited fiscal capacity prior to the global financial crisis of 2007–09, contributing to divergent crisis experiences.
- Cross-country perspective: Comparative analysis used to identify reasons for differing outcomes across the featured economies.
Policy-Relevant Observations
- Sovereign-financial nexus: Policymakers in economies with large banking systems should recognize the amplified interplay between bank health and sovereign sustainability, especially where foreign currency cross-border activities are substantial.
- Exclusions for policy transferability: Lessons from off-shore centers are less transferable because their international linkages are relatively unrelated to domestic activities.
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Cross-Cutting Themes in Economies with Large Banking Systems, April 16, 2010. Accessed 9/18/2026.
Content in this bundle
- Cross-Cutting Themes in Economies with Large Banking Systems; IMF Policy Paper; April 16, 2010