Admati Says Fragile System Is Inherent in Banking

The video discusses the fragility of the financial system, emphasizing the need to assess and reduce interconnectedness and indebtedness. It highlights the challenges of regulation, noting that both bankers and regulators face limitations. The concept of negative interest rates is explored, with a focus on its implications for the financial sector.

What is one of the main reasons the financial system remains fragile?

• Lack of technological advancement

• Strict government regulations

• Incentives that promote fragility

• High levels of savings

Why might bankers be hesitant to self-regulate?

• They are too focused on long-term goals

• They are heavily monitored by the government

• They lack the necessary skills

• They benefit from the system's fragility

What is a criticism of current regulatory approaches?

• They focus too much on technology

• They are overly simplified

• They rely on outdated methods

• They are too innovative

What is a challenge associated with negative interest rates?

• They lead to increased savings

• They are not traditionally covered in academic studies

• They create a clear market structure

• They are well-documented in financial textbooks

What does the term 'extend and pretend' refer to in the financial sector?

• A strategy to increase transparency

• A method to delay addressing financial issues

• A way to enhance regulatory compliance

• A technique to boost short-term profits