Evaluation of Too-Big-To-Fail Reforms The third issue that I would like to raise is the problem of “too big to fail"—that is, the perception by investors that some institutions will receive support from their governments if they become distressed. This weakens market discipline and allows such firms to become even larger, more leveraged and more complex.
To address this challenge, the FSB and other global standard setters developed a framework and a set of policy measures intended to reduce the moral hazard risks posed by systemically important financial institutions.