Insurance principle
A large institution like a bank can actually dump the individual shocks of some little drama happening here and there, and paying a premium, you can actually spread that risk over the whole system.
Immediately related elementsHow this works
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The Global Financial Crisis Â»The Global Financial Crisis
How should the US and other governments respond? Â»How should the US and other governments respond?
Measures to prevent Financial Crisis recurring? Â»Measures to prevent Financial Crisis recurring?
Prohibit wagers on upside or downside moves of prices Â»Prohibit wagers on upside or downside moves of prices
Finance is extremely usefull Â»Finance is extremely usefull
Insurance principle
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