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Ms. Enrica Detragiache

remain. The paper addresses the question of how this process affects the economy and, more specifically, the welfare of the depositors and of the business sector. The first result is that increased international integration increases bank fragility, in the sense that banking panics become more likely: the foreign asset becomes a better alternative to domestic bank deposits from the point of view of domestic savers, so running the bank to put the money into the foreign asset is more attractive. 4 Banking panics lead to deadweight costs, in the form of a reduction in