Systemic risks can emerge even when financial institutions manage their risks in a way that looks appropriate from their individual perspective. Given the interconnectedness in highly developed financial systems, the behaviour of financial institutions – especially systemically important ones – can have an impact on other financial institutions and the financial system as a whole.
Macro-prudential supervision has to take account of these externalities and focus on the interconnectedness of financial institutions, markets and infrastructures. Therefore it contributes to an important public good – namely systemic financial stability. Coping with systemic risks will continue to be of the essence, especially in view of the increasing sophistication of global finance that, in turn, is facilitated by the rapid technological progress.