big to fail banking institutions are “a paradox that must be tackled,” the Bank of England said today in its final quarterly report of the year.
The “social costs” of failure amid large global banks have led to considerations of structural reform, the Bank said.
The Independent Commission on Banking and Financial Stability Board has been tasked with looking into possible reforms.
Three of UK’s largest banks have assets in excess of annual GDP, the report says.
“Too important to fail banks may be subject to less market discipline, and are likely to grow more rapidly and become more dependent on debt funding – and more highly interconnected and leveraged,” they said.