Macroprudential Policy Quotes

With government deregulation and the triumph of financial liberalization, the dangers of systemic risks, the possibility of a financial tsunami, sharply increased.

Looking past the immediate crisis, a more resilient system must be built on stronger and better designed shock absorbers, both in the major institutions and in the infrastructure of the financial system.

But our system of regulation must keep up with this. If it fails to keep up, it will hold back economic expansion. We need financial market regulation that works at national and European level.

Large financial institutions in this country will always play a role that is essential to our economic growth. But they must only be permitted to grow and interconnect, throughout our economy, under careful oversight and with a mechanism for allowing those connections to be broken safely.

Divestment measures would improve overall banking sector health.

Any bank that is too big to fail is too big. Period.

For market discipline to constrain risk effectively, financial institutions must be allowed to fail. Under optimal financial regulatory and financial system infrastructures, such a failure would not threaten the overall system.

Our overriding goal in restructuring our financial architecture should be that taxpayers never again have to save a failing financial institution.

In the future, financial firms of any type whose failure would pose a systemic risk must accept especially close regulatory scrutiny of their risk-taking.

The best approach here, if at all possible, is to use supervisory and regulatory methods to restrain undue risk-taking and to make sure the system is resilient in case an asset-price bubble bursts in the future.

In the financial system we have today, with less risk concentrated in banks, the probability of systemic financial crises may be lower than in traditional bank-centered financial systems.

The role of liquidity in systemic events provides yet another reason why, in the future, a more system wide or macroprudential approach to regulation is needed.

If we are really serious about preventing another crisis like the 2008 meltdown, we should simply ban complex financial instruments unless they can be unambiguously shown to benefit society in the long run.

We need to think deeply about whether we can sustain banks that are not only too big to fail, but potentially too big to bail.

Without a doubt, we do support a robust framework for aggregate capital and liquidity and stress-testing.

Limiting the destructive risk-taking by large financial firms and banks which are 'too big to fail' is needed.