Yet certain areas still need a lot more work. I would like to discuss two of these issues here today: the “too big to fail” problem and the shadow banking sector. 2  Still “too big to fail”? The “too big to fail” problem was a key factor in the recent crisis, and it still isn’t completely solved.
But first let’s take a look at the essence of this problem. Participants in the financial system are highly interconnected. If a bank runs into trouble, this will also affect its counterparties. And if the bank in question is particularly large or has an especially high number of counterparties, its woes can destabilise the entire financial system.