On the one hand, failure of systemically important financial institutions (or SIFIs) would generate large costs that the institutions themselves do not internalize. On the other hand, belief that these institutions are too big to fail creates a moral hazard problem, weakening market discipline and providing the institutions with an incentive to take excessive risk.
Both of these observations point to the need to find ways to allow such institutions to fail without injections of public money.   At the global level, the Basel Committee is working together with the Financial Stability Board to develop a comprehensive approach to address the systemic risk created by global SIFIs.