Published : 2023-11-21

Reflections about too big to fail banks and moral hazard

Leszek Pawłowicz



Abstract

Several reflections and suggestions concerning the planned regulations aimedat limiting moral hazard done by TBTF banks were presented in this article. The scope of reflection is mainly the effectiveness of implementation of a resolution regime. To allow effective implementation of the resolution process probably the TLAC (Total Loss Absorbing Capacity) mechanism will be used. The mechanism will, according to the author, probably start the division of TBTF banks due to additional capital restrictions. If the division mechanism of two banks from the G-SIB group were to start it would be enough to be moderately optimistic when it
comes to limiting moral hazard in banking.

Keywords:

TBTF, resolution regime, moral hazard, European Resolution Fund, European Stability Mechanism



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Pawłowicz, L. (2023). Reflections about too big to fail banks and moral hazard. Safe Bank, 60(3), 78–88. Retrieved from https://ojs.bfg.pl/index.php/bb/article/view/333

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