Posted on May 27, 2011 by iMFdirect
By Aditya Narain and İnci Ötker-Robe
Folklore is riddled with tales of a lone actor undoing a titan: David and Goliath; Heracles and Atlas; Jack and the Beanstalk, to name a few.
Financial institutions seen as too important to fail have become even larger and more complex since the global crisis. We need look no further than the example of investment bank Lehman Brothers to understand how one financial institution’s failure can threaten the global financial system and create devastating effects to economies around the world. Continue reading
Filed under: Financial Crisis, Financial regulation, International Monetary Fund | Tagged: bailout, Basel III, capital requirements, crisis prevention, financial disclosure, financial institutions, financial stability, financial supervision, global financial system, investment bank, market discipline, moral hazard, resolution regime, systemic collapse, systemic risk, too big to fail, too important to fail | 3 Comments »
Posted on August 16, 2010 by iMFdirect
By Laura Kodres
Just as a tornado in Kansas transplanted Dorothy and, her dog, Toto, from familiar comforts to the unknown land of Oz, the global crisis has led many to wonder what has become of the global financial system and, more importantly, what will it look like next. Is the wicked witch of the West—excessive risk taking and leverage—really dead?
But now, as the storm subsides, there is time to speculate about what the future financial sector might look like. My IMF colleague, Aditya Narain, and I have done just that in a new Staff Position Note that attempts to discern the contours of this new financial landscape. What is clear is that the new landscape will be influenced by both the private and public sectors—their reactions to the crisis and to each other.
Filed under: Advanced Economies, Economic Crisis, Emerging Markets, Financial Crisis, Financial regulation, IMF, International Monetary Fund, Multilateral Cooperation | Tagged: banks, contagion, deleveraging, financial reform, Financial regulation, financial sector reform, financial sector supervision, financial supervision, financial system risk, global financial system, leverage, macrofinancial linkages, macroprudential regulation, nonbanks, regulatory perimeter, risk taking, systemic collapse, systemic risk | 5 Comments »