The New Banking Sector. Towards Reforming the Too Big To Fail Banks

摘要

The banking system has passed over time, through an intense process of invention and innovation. This process has allowed banks to diversify their activities, to create new and more complex products and to take excessive risks in order to gain profits. All these, however, were not accompanied by an appropriate legislative framework to protect banks in case of economic imbalances. In this context, since the beginning of the economic crisis, a strong concern has been voiced about the reform of the banking sector. New rules were put in place with a view to reduce the risks within the financial system. A major responsibility for the crisis was attributed to the too big to fail banks. Thus, many of the newly adopted regulations targeted this specific segment of the banking sector. Authorities in Europe and the United States have received significant powers including the power to impose banks downsizing if the authorities evaluation shows that the banks in question pose a serious risk for the stability of the system. However, after four years from the adoption of the first reform measures, the banking system remains large relative to the gross domestic product, with banks too big to fail and with no real prospects for change. The efforts made so far treat superficially the too big to fail problem and sill leave many questions regarding the banking system's ability to cope with future shocks manifested in the economy.