Ignazio Visco: The real effects of disrupted credit - evidence from the Global Financial Crisis

Remarks by Mr Ignazio Visco, Governor of the Bank of Italy, at the Panel Discussion "The Real Effects of Disrupted Credit: Evidence from the Global Financial Crisis", Per Jacobsson Lecture by Ben S. Bernanke, Bank for International Settlements, Basel, 24 June 2018.

The views expressed in this speech are those of the speaker and not the view of the BIS.

I am very pleased to be here today to discuss the economic effects of credit crunches with such a distinguished group of colleagues and friends following Ben Bernanke’s insightful lecture.

The time is ripe to draw some policy lessons about the exceptional wave of turbulence that has hit credit markets in the last decade. I shall do so from a European angle. The European banking system has endured two major crises in the past decade: the Global Financial Crisis (GFC) and the Sovereign Debt Crisis (SDC). The former was mostly imported from the United States and it hit European banks through their exposure to toxic assets and the freeze of wholesale funding markets. The latter originated within the euro area and was due to a loss of confidence in the sustainability of public debts and, ultimately, to the risk of a break-up of the monetary union.