Panic of 1945

The Panic of 1945 was a short-lived banking crisis centered in Belhavia with limited fallout to close trading partners such as Emmeria, Eagleland, Rodarion, and others that emerged with the market's reactions to the Fall of Galarian and the establishment of the Provisional Government regime of Matthew Rabin. The crisis was started on May 23^rd, 1945, after Rabin reopened the Provisa Stock Exchange and other market indices, and a pervasive fear among investors that the new government would fail to honor Galarian's war debts, that it would immediately re-establish a fixed monetary regime, thus causing a currency crisis, and that the fall of the Galarian autocracy would end war production, which had been heavily-invested in by speculators.

To alleviate domestic and foreign markets fears, President Rabin issued a statement on May 29^th pledging to honor all sovereign debts. He maintained some war production through the ongoing Provisa Convention and continuing fighting with Ulthrannia around Tobia in the war.

The crisis ebbed and waned between late May and early October, when the Convention's proclamation of the new Belhavian political order soothed the markets and stabilized stocks. However, the immediate speculative bubble in war goods and currency burst, hitting thousands of small and large investors. Two banks, First Dakos National and the Freeport War Investment Company, went bankrupt. In December 1945, Rabin signed the charter of the PMF, re-establishing Belhavia's precious metal monetary standard and ending the floating exchange rate for a fixed rate for the Belhavian shekel.