Defining systemic importance Identification of systemically important banks is a very difficult and complex issue. As brought out in the FSA discussion paper the key variables to be taken into account are size and interconnectedness.
Size, by itself, may not be very useful but it becomes important in respect of large conglomerates having presence across major segments as also for entities having dominance in the funding markets. Thus, size and interconnectedness need to be looked together as a matrix quadrant.