The paper argues that the factors that determine treatment priority in socialized medicine, namely gravity of complaint and patient “importance†are similar to those that determine whether or not a frail banking system will be bailed out in a fixed exchange rate regime.

The paper considers the sizes of banking sectors that are vulnerable to runs when the central bank cares about economic stability and currency peg credibility. It is shown that when banks are small, the central bank will recapitalize unhealthy banks because doing so will not compromise its peg....