A Framework for Crisis Prevention and Management: Where is Pillar 4?

A central objective of regulatory reform is to minimise the potential for the costs of bank failure to be passed to tax payers. The core objectives are two-fold: to lower the probability of bank failures, and to lower the cost of those failures that do occur. A central theme is that reform needs to be strategic rather than incremental, with more emphasis given to reducing the costs of bank failures. Problems that threaten financial stability are in part endogenous to the regulatory regime...