share the burden of the default with peso depositors. The incentive to dollarize is reinforced by common banking system …

in the banking system. This framework describes the type of bank run that has occurred historically in the United States … and more recently in developing countries. However, in a modern banking system, large withdrawals take the form of … electronic payments of inside money, with no analog of a depletion of a scarce reserve from the banking system. In a new …

known, the banking authority can eliminate the possibility of a bank run by committing to suspend payments to depositors if … a run were to start. We show, however, that in an environment without commitment, the banking authority will choose to …

welfare because it only reduces risk sharing. In contrast, in the U.S. banking system, where there is less competition for …

that the different activities are jointly determined and depend on the efficiencies of countries’ banking sectors …