Garry Schinasi: The Challenge of Large, Complex Financial Institutions (3/7)

The video discusses systemic risks in large financial institutions and the need for global solutions. It highlights the challenges faced by policymakers in regulating these institutions and markets, emphasizing the importance of aligning national and global policies. The speaker calls for further reforms, including better resolution regimes and regulation of over-the-counter derivatives, to mitigate systemic risks. The role of sovereignty and the need for international cooperation are also explored.

What is the main reason the speaker uses the Willie Sutton story?

• To suggest that bankers are thieves

• To emphasize the importance of clear objectives

• To highlight the need for more bank robberies

• To criticize financial institutions

What did the financial crisis reveal about the existing financial stability architecture?

• It was adequate for managing systemic events

• It was too focused on global solutions

• It was inadequate for safeguarding against systemic events

• It was overly complex and unnecessary

Why are systemically important financial institutions (SyFIs) a major source of global systemic risk?

• Due to their lack of regulation

• Because of their size, complexity, and interconnectedness

• Due to their small size and simplicity

• Because they operate in isolated markets

What is one of the proposed solutions for managing systemic risks in financial institutions?

• Reducing the size of all banks

• Aligning national resolution regimes

• Increasing the number of financial institutions

• Eliminating all financial regulations

What does the speaker suggest about the Volcker Rule in relation to the Dodd-Frank Bill?

• It is already too broad

• It should be eliminated entirely

• It needs to be broader and more comprehensive

• It should focus only on small banks

What role does the speaker believe governments should play in financial regulation?

• Governments should have no role

• Governments should encourage institutions to internalize externalities

• Governments should only focus on local issues

• Governments should increase taxes on all financial transactions

What is the speaker's view on the need for global solutions to financial stability issues?

• They are unnecessary and costly

• They are essential for managing systemic risks

• They should be avoided to maintain national sovereignty

• They are only needed for small financial institutions

How does the speaker suggest financial institutions should be encouraged to properly price their risks?

• By reducing capital charges

• By increasing capital and leverage charges

• By providing government subsidies

• By eliminating all taxes

What does the speaker identify as a challenge in managing systemic risk?

• Too much focus on global cooperation

• Over-regulation of small banks

• Excessive political interests

• Lack of understanding of the solutions

What is the speaker's stance on the regulation of the global over-the-counter derivatives market?

• It should remain unregulated

• It needs to be regulated more effectively

• It should be regulated only by central banks

• It should be left to individual countries