Jacopo Carmassi (University LUISS Guido Carli, Research Fellow at CASMEF, Arcelli Center for Monetary and Financial Studies; Fellow of the Wharton Financial Institutions Center)

“Corporate Structures, Transparency and Resolvability of G-SIBs”

abstract

Before the global 2008 financial crisis, most officials appeared not to have anticipated the problems that would need to be addressed if a large cross-border bank should need to be resolved. During and after the financial crisis, this issue surged to the top of the policy agenda. Events made clear that several institutions had become too big and too complex to fail: new rules were needed to make resolution of global banks possible, without cost to taxpayers or damaging spillovers to the economy. After the crisis, the G-20 gave the Financial Stability Board (FSB) a mandate to identify Global Systemically Important Banks (G-SIBs) and to ensure that each had a credible recovery and resolution plan.
The complex structure and opaque connections among G-SIBs impeded oversight by the authorities before the crisis and greatly complicated crisis management. The study examines the various factors influencing the complexity of banks, presents measures of the evolution of complexity and discusses various policy reforms aimed at simplifying and improving the transparency of G-SIBs.