The Regulation of Systemically Relevant Banks

Sebastian Moenninghoff provides an extensive overview of the status of the Too-Big-to-Fail doctrine post-crisis and develops the first comprehensive framework to categorize and discuss the full range of major policy options for regulating banks. Governments need to actively manage their exposure to banking system risk with the optimal policy mix depending on risk return preferences of a society and an economys institutional setting. The new regulation for global systemically important banks developed by international regulators following the financial crisis is a significant step in expanding the tools to manage government exposure to banking system risk.