This banking turmoil represented the most significant test since the global financial crisis of ending too-big-to-fail—whereby a systemic bank can be resolved while preserving financial stability and protecting taxpayers.
So, what’s the verdict? In short, while significant progress has been made, further work is required.
On the one hand, as we note in a recent report, the actions of authorities last year successfully avoided deeper financial turmoil, and the financial soundness indicators for most institutions signal continued resilience. In addition, unlike many of the failures during the global financial crisis, this time significant losses were shared with the shareholders and some creditors of the failed banks.