Financial crises come from bank runs. An innovative way to prevent bank runs is to use equity-financed banking. Equity-financed banks would replace debt with equity as their method of financing and back up all deposits with liquid assets like Treasury bonds. Since it would not hold any debt, bank runs would become a thing of the past.
Hoover Institution fellow Michael Spence discusses finding solutions to a dysfunctional market economy; Janet Yellen's transition out of the Fed; central bank coordination; the biggest risk for central banks in 2018; China's debt problem; and US trade policy.