BIS Review 123/2010  5  Information economics and principal-agent theory are also essential to understanding the problems created by so-called too-big-to-fail financial institutions. Prior to the crisis, market participants believed that large, complex, and interconnected financial firms would not be allowed to fail during a financial crisis.
These two measures are not capital controls as they are applied equally to domestic and foreign banks. And although it may be premature to judge, they do appear to have influenced banks’ risk taking in foreign currencies.