Too big to fail still too big a problem for banks

Hayley Kirton
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The Bank of England's Mark Carney chairs the FSB (Source: Getty)

Cleaning up the world's biggest banks in the event of a crisis is easier than it has been but there is still more to be done, the Financial Stability Board (FSB) has warned today.

In particular, the papers published by the FSB, which is chaired by Bank of England governor Mark Carney, said more could be done to recognise the liquidity and funding needs of large lenders which are in trouble.

While Andrew Gracie, chair of the FSB cross-border crisis management group for banks, remarked that the situation had "come a long way", he added: "Challenges remain in a number of important areas where we need to undertake renewed efforts during the remainder of the year and in 2017 to complete the job of ending 'too big to fail'."

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Papers published by the FSB today also included guidance on how global systemically important – or so-called too big to fail – lenders could access temporary funding without being bailed out by the public sector and suggestions on how critical services, such as IT platforms, could be better supported while a bank is going through difficulties.

Elke Konig, chair of the FSB resolution steering group and chair of the European single resolution board, said: "The steps outlined in our report to the G20, once implemented, will enable us to complete our task so that firms can be resolved at no cost to taxpayers."

The guidance has been drafted based on responses to a consultation which was launched last November.

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