Institutional Design and the New Systemic Risk in Banking Crises

Abstract

who describes systemic risk as "the probability that the financial system is unable to support economic activity": Mark Carney, cited in Nikil Chande, Nicholas Labelle, and Eric Tuer, Central Counterparties and Systemic Risk (Bank of Canada, Financial System Review, December 2001) at 1; Ben Bernanke, who advocates for a broad definition that includes "developments that threaten the stability of the financial system as a whole and consequently the broader economy":

Benchmarking Macroprudential Policies: An Initial Assessment

“…The single-entity approach has some advantages. It creates clarity of responsibility in identifying risks and implementing policies (IMF 2011), and is administratively simple and cost-minimizing (Anand et al 2014). Furthermore, it serves to eliminate regulatory gaps and ensure policy consistency, thereby reducing regulatory arbitrage (Anand et al 2014; see also Pan 2010).…”