Systemically Important Banks (SIBs) in the Post-Crisis Era: 'The' Global Response, and Responses Around the Globe for 135 Countries

Abstract

Financial system policymakers around world continue to respond vigorously to problems in financial markets, financial institutions, and financial system regulation and supervision brought into high relief by global financial crisis. However, overall understanding of what those responses are remains rather vague and limited. Our study contributes to improving state of knowledge by focusing on one particularly relevant issue, regulation and supervision of systemically important banks (SIBs). The heart of our contribution is presentation of information heretofore obscure, or new, or both. Our approach is to develop two complementary perspectives. The first perspective is what we have characterized as the global view. That discussion begins by noting that G20 and Financial Stability Board (FSB) are architects of most significant agenda in world to reform global financial system, including in particular as that system operates through systemically important financial institutions (SIFIs). We explain what G20 and FSB are, how they came to occupy driver's seat so to speak, and evolution of their major financial system reform initiatives since darkest days of global financial crisis. Our discussion highlights SIFIs initiatives, emphasizing in particular those pertaining to global systemically important financial institutions/banks (G-SIFIs and G-SIBs). Our second perspective is a country-specific one. It starts by making important observation that while most of largest banks around world have not been designated as globally systemically important, they are nevertheless systemically important when considered in a national or domestic context. Under those circumstances it is therefore fortunate that, due to recent World Bank efforts, a large set of information exists about regulation and supervision of SIBs. Our study summarizes and highlights new data collected by World Bank on post-crisis regulation and supervision of SIBs by 135 countries around world. Broadly, that analysis shows that countries are more similar than different in measures they have adopted for regulating and supervising SIBs. We conclude our study by suggesting that, although that fact should aid countries in coordinating policies internationally, there is a very long way to go in that respect.