Systemically Important Banks (SIBs) in the Post-Crisis Era: 'The' Global Response, and Responses Around the Globe for 135 Countries

Abstract

Financial system policymakers around the world continue to respond vigorously to the problems in financial markets, financial institutions, and financial system regulation and supervision brought into high relief by the global financial crisis. However, the overall understanding of what those responses are remains rather vague and limited. Our study contributes to improving the state of knowledge by focusing on one particularly relevant issue, the regulation and supervision of systemically important banks (SIBs). The heart of our contribution is the presentation of information heretofore obscure, or new, or both. Our approach is to develop two complementary perspectives. The first perspective is what we have characterized as "the global view." That discussion begins by noting that the G20 and the Financial Stability Board (FSB) are the architects of the most significant agenda in the world to reform the global financial system, including in particular as that system operates through systemically important financial institutions (SIFIs). We explain what the G20 and the FSB are, how they came to occupy the driver's seat so to speak, and the evolution of their major financial system reform initiatives since the darkest days of the global financial crisis. Our discussion highlights SIFIs initiatives, emphasizing in particular those pertaining to global systemically important financial institutions/banks (G-SIFIs and G-SIBs). Our second perspective is a country-specific one. It starts by making the important observation that while most of the largest banks around the world have not been designated as "globally" systemically important, they are nevertheless systemically important when considered in a national or "domestic" context. Under those circumstances it is therefore fortunate that, due to recent World Bank efforts, a large set of information exists about the regulation and supervision of SIBs. Our study summarizes and highlights the new data collected by the World Bank on the post-crisis regulation and supervision of SIBs by 135 countries around the world. Broadly, that analysis shows that countries are more similar than different in the measures they have adopted for regulating and supervising SIBs. We conclude our study by suggesting that, although that fact should aid countries in coordinating policies internationally, there is a very long way to go in that respect.

Keywords: Systemically Important Financial Institutions, SIFIs, Systemically Important Banks, SIBs, G20, Financial Stability Board, FSB, Basel III, Basel Committee on Banking Supervision, Global Financial Crisis, International Financial System Regulation, Financial System Reform

JEL Classification: F33, F36, G15, G21, G28, K33, N20