Abstract
The financial crisis which manifested in the USA in 2008, revealed the extent to which the largest and most interconnected financial institutions in the USA had become ‘too big to fail’, i.e., so systematically and significantly interwoven with each other and the entire US and global financial and economic system that their very survival was seen as essential to the sustainability of the entire financial system and to public welfare. We argue that it is essential to understand the financial crisis that began in 2008 from a historical and ethical perspective. We conclude that, in light of individual and collective moral hazards, the overall governance framework that protects the sustainability of the financial system should explicitly adopt as a moral imperative the principle that any financial institution should be able to fail without such failure threatening the entire financial system.
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