That is, the safety net creates incentives for banks to take larger risks than otherwise, because the safety net, and potentially taxpayers, may absorb most of the losses if the BIS Review 34/1998 ˝  -2-  gamble fails. Such incentives are especially strong if the bank is close to failure since, at this point, bank stockholders have virtually nothing to lose.
However, on a more constructive note, it has also contributed to the emergence of a collective view on balancing the role of the financial sector in the development process with the need for global co-ordination on regulation in the face of increasing global integration of both financial systems and economies as a whole.