Safety nets must be implemented judiciously to ensure stability of the global financial system
Thomas Hoenig, vice chairman of FDIC advocates for more useful and transparent capital standards that allow for greater comparability among all global and domestic financial firms.
For nearly half a decade, policymakers globally have been producing a near constant stream of initiatives to try to address the effects of the financial crisis. Government safety nets comprising deposit insurance, central bank loans, and sovereign support—and the multi-billion dollar subsidy they create—have expanded to cover and fund activities and enterprises that traditionally do not need protection to function. For all this effort, our financial and economic systems remain fragile.
Also of concern is that the ever-expanding safety net and related subsidy encourage global firms to…
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Categories: Basel III
, Capital & Strategic Issues
, Risk and Regulation
Keywords: Thomas Hoenig
, Dodd-Frank Act
, Systemic Risk