June 22, 2010

Open Economics: Inspiring Confidence Through Transparency

 

Market confidence is a valuable commodity in tough economic times. And governments will try just about anything to inspire some.  Recapitalization--bailouts--for struggling sectors is one approach.  Another (less deficit-inducing) solution seeks to inspire confidence through a sizable dose of transparency. Bank stress tests are beginning to figure prominently in the later effort.  Stress tests measure how well financial institutions perform under financial "what if" scenarios.

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