The Politics of Moral Hazard
The crisis in Cyprus has shown that the true contest in Europe is less between moral hazard and financial stability than it is between financially sensible and politically acceptable solutions. But politics in Europe is national, so what one parliament regards as the only possible solution another regards as entirely unacceptable.
https://prosyn.org/Sdn1OUV
BRUSSELS – It is an old and never-ending contest. On one side are the moral-hazard scolds, claiming that one of the major responsibilities confronting policymakers is to establish incentives that demonstrate that imprudent behavior does not pay. On the other side are the partisans of financial stability, for whom confidence in the financial system is too precious to be endangered, even with the best possible intentions.