Systemic risk capital
We have seen what can happen when the size of financial institutions rivals - or even surpasses - that of their home countries. It may be time to limit the size of institutions through imposition of systemic risk capital requirements, argues David Rowe
The still unfolding financial crisis has shown the horribly difficult policy dilemma posed by financial institutions that are 'too big to fail'. This is a situation that evolved gradually and was driven by some perfectly sound public policy arguments. The key driver of consolidation in the banking sector has been improved diversification of the balance sheet - banks that are constrained
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