Containing Systemic Risk
AbstractSystemic risk refers to the risk of financial system breakdown due to linkages between institutions. This risk cannot be assessed by looking at how individual institutions manage risks but instead requires a full understanding of how the system as a whole operates. At present, the data available to central banks and financial regulators are not at all adequate for the task of assessing systemic risk and the new European Systemic Risk Board needs to address this issue. There is a lot of exciting ongoing research devoted to measuring systemic risk and providing signals to regulators as to when and where they should intervene. However, the tools being developed are still limited in their usefulness. More pressing than the development of these tools is the development and implementation of policy measures to make the financial system more robust. These measures should include higher capital ratios, limits on non-core funding and redesigning financial systems to be less complex.
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Bibliographic InfoPaper provided by School Of Economics, University College Dublin in its series Working Papers with number 200927.
Length: 23 pages
Date of creation: 01 Dec 2009
Date of revision:
Financial Risk; Systemic Risk; Banking;
Other versions of this item:
- Whelan, Karl, 2009. "Containing systemic risk," Open Access publications from University College Dublin urn:hdl:10197/1672, University College Dublin.
- NEP-ALL-2009-12-19 (All new papers)
- NEP-BAN-2009-12-19 (Banking)
- NEP-RMG-2009-12-19 (Risk Management)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Lucia Alessi & Carsten Detken, 2009. "Real Time’ early warning indicators for costly asset price boom/bust cycles - a role for global liquidity," Working Paper Series 1039, European Central Bank.
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- Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "This Time Is Different: Eight Centuries of Financial Folly," Economics Books, Princeton University Press, edition 1, volume 1, number 8973.
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