Global Systemically Important Banks – How to Identify and Regulate Them?

Abstract

In this paper we investigate the issues of identification and capital regulation of global systemically important banks (G-SIBs). Both issues are fundamental for global financial stability. However, there are many open questions that remain on the political and academic agenda. We underline that the simple ratio-based solution for the identification and regulation of G-SIBs presents many drawbacks and the idea to increase loss absorption capacity may generate new risks that are not covered under the current regulatory framework.

Keywords: bank capital, risk, G-SIB

JEL Classification: G21, G15