Christian Leuz and other members of the Shadow Financial Regulatory Committee
The recent G20 meetings demonstrated the substantial divide between policymakers over the right approach toward the “too-big-to-fail” problem for large, global financial institutions. Some policymakers accept that some financial firms will inevitably be too-big-to-fail and wish to focus policy efforts on facilitating orderly bailouts and agreeing in advance on “burden-sharing” arrangements for allocating bailout costs among countries. Other policy makers reject that view and argue that policies could be introduced that would substantially reduce the chance of a failure by a large financial institution. Furthermore, they believe that it would be possible to reform the process of resolving failed institutions to permit large, complex institution to fail, and to be wound down with significant losses to its creditors, but without generating intolerable spillovers or systemic risk.
