Tool one: structural resilience We are relatively far advanced, and compare favorably to other jurisdictions, in implementing a framework of rules and supervision that compels large, complex financial institutions to build substantial loss-absorbing buffers and to internalize the costs of undertaking activities that pose risks to the system.
This framework represents a substantial improvement on structural resilience relative to the pre-crisis framework across a number of dimensions: It is forward looking in assessing risks under severely stressed conditions, and it is explicitly macroprudential in design so that bank management internalizes risks not only to the safety and soundness of their own institution, but also to the system as a whole.