Interbank Exposure in the Fourth Federal Reserve District
Contagion risk in the banking system - the sensitivity of a bank to the failure of another bank - is a source of public policy concern. It is especially a problem when the failure of one bank, or a limited number of banks, causes multiple failures in the banking system. Significant contagion effects have public policy implications both for the way banks are regulated and for the solvency of federal deposit insurance funds.
The views authors express in Economic Commentary are theirs and not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. The series editor is Tasia Hane. This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. This paper and its data are subject to revision; please visit clevelandfed.org for updates.