e-journal
Can we make global banks safer? A practitioner's view
Abstract: Since the banking crisis of 2008, big international banks have been considered a threat to financial stability. These banks are under a regulatory pressure that goes farther than the new Basel rules. Regulators are trying to reduce their international interconnectivity, they are trying to tackle the problem of 'too big to fail', and they are looking at ways to split the retail banking activity from their activities in the wholesale markets. This uncoordinated approach from three angles often makes the debate confusing and incoherent. Moreover, the value added that international banks potentially bring to the globalized economy is neglected. This article gives an overview of the advantages of having big international banks in normal times and the risks that such banks pose to society in times of crisis, and proposes an appropriate regulatory treatment that should reduce the risks while retaining as many of the advantages as possible.
Keywords: banking crisis, bank regulation
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