Ending the era of too big to fail banks
In 2008, the world was unprepared for the Global Financial Crisis. Governments bailed out their biggest banks in order to secure their citizens’ finances, but in doing so created a fertile environment for unsustainable, high-risk behaviour amongst the worlds’ leading institutions.
At the latest G20 Summit in Turkey, world leaders finally put into place measures to end the era of “Too Big to Fail” banks. These measures involved increasing the amount of capital the worlds’ top 30 banks will be required to have on reserve, in order to cushion themselves from future financial shocks.
From the outset, this seems to make sense, but what does this mean for the future of banking, both here in Australia and around the world?
- Professor Simon Tormey, Head of the School for Social and Political Sciences, University of Sydney
- Dr Rob Nicholls, Senior Lecturer at the School of Taxation and Business Law, University of New South Wales
- Professor Frank Ashe, Fellow at the Macquarie University Applied Finance Centre