In the financial crisis of 2008/2009, there was a big controversy topic, that is why it is exciting, as it is now a matter of: "Too big to fail" was then the buzzword for the finding that some banks are so large that they can speculate to the fact that the state is in a crisis not insolvent be – because the consequences for the economy would be devastating. Claudia Buch, a member of the Federal reserve Board, presented on Friday a report on how far the arrangements in terms of "Too big to fail" are now in progress. The Financial Stability Board (FSB), which, among other things, the Bundesbank, had been entrusted in the aftermath of the financial crisis, with the Evaluation of this topic.
editor in the economy.F. A. Z.
falls out of The results on 133 pages in a very differentiated way. The basic trend, however, is: "The reforms seem to work – the indicators of systemic risk and Moral Hazard have fallen," said book. What is meant is that, on the one hand, the danger is that a very large Bank entrains by her fall over the whole financial system, had become lower. On the other hand, the incentives for banks have declined to speculate on the be Saved.
As grounds for such hope, the new legal provisions available for resolution of banks in crisis will be referred to the case that not all countries had been introduced in many, if. On the other hand, the more stringent capital requirements for banks would not have missed, apparently, effective. "The capital adequacy ratios of systemically important banks doubled over the last decade about," said book.
indicators for systemic risks are developing positively
Different than prior to the reforms, some feared, would have the more stringent rules, however, no economic damage, such as by reducing lending, in so far as one can judge, according to the Figures up in front of the Corona-crisis: "Our analysis shows that the reforms have brought benefits for the company; not only the banks are now more resilient – there are no signs of negative side effects,“ said book. Technically, this analysis is anything but simple. The experts of the FSB work with a set of indicators to assess the "systemic risk" on the basis of data such as the size of the banks, the complexity of the balance sheet and the interrelatedness of banks. The data was combined with market on the financing costs of banks. These indicators show, compared to the year 2010, a significantly positive development.
"The reforms are perceived by market participants as credible," said book. "Our study used a range of qualitative and quantitative Evidence to show that the financing costs of banks the probability of a Bail-in reflect on," she said. "Bail-in" refers to the possibility that in the case of a Bank liquidation, the creditors and Bond holders to be used – and not the state.
However, not all problems can be solved, reports the paper. "Bank resolution is a complex process, and some of the obstacles to the solvability remain." You work more and the weaknesses have to be addressed. In addition, they wanted to encourage the remaining States to complete the implementation of the reforms. Supervisors, companies and markets much better information now than in the past – but the reporting on this topic, and the publications could be improved.Updated Date: 28 June 2020, 16:20