The views expressed within this post are those of the author alone and do not represent those of the OECD or its member countries.
A decade after the global financial crisis, most of the financial regulatory reform package to make the system stabler and fairer has been completed. The agenda is is now changing to evaluation of reform effects. This post draws on a recent article on implicit bank debt guarantees  and asks whether the progress in limiting them has made the financial system fairer.
The financial regulatory reform, designed and subsequently rolled out over the past decade following the global financial crisis, is explicitly described as an attempt to make the international financial system fairer. In defining what is involved in this goal, the Financial Stability Board (FSB), an international body set up in April 2009 to monitor and make recommendations about the global financial system, refers to large banks at the centre of the financial system that did not internalize the social costs that their excessive risk-taking created. Gains of risk-taking activities were privatized and losses socialized. A fairer system involves funding conditions that are more closely aligned with the riskiness of the entities. In other words, there would be no room for implicit bank debt guarantees. Continue reading