“Too Big to Fail” Is Too Costly to Continue

Thomas F. Huertas

Chapter 1 in Safe to Fail, 2014, pp 4-20 from Palgrave Macmillan

Abstract: Abstract Finance is central to the growth and development of the world economy, and a relatively small number of global systemi-cally important financial institutions (G-SIFIs) are central to finance. But this interdependency is dangerous. The failure of one or more G-SIFIs could disrupt financial markets and put the world economy into a tailspin. Even if such a decline could be arrested, it may take many years before output again reaches its pre-crisis level and many more before it attains levels consistent with the pre-crisis trend of growth rates. Thus, crises can be quite costly, particularly if they permanently scar the economy (see Figure 1.1).1

Keywords: Monetary Policy; Central Bank; Credit Rating; Great Recession; Government Debt (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-38365-5_2

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DOI: 10.1057/9781137383655_2

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