[33] The recent failures of banks in the United States and Switzerland have notably brought to the fore the question of how well the “toobig-to-fail” (TBTF) problem has been resolved, or whether it is actually still up to government entities to prop up weak institutions, where there is any doubt.
An evaluation by the Financial Stability Board[34] shows that we now have a much better institutional framework for dealing with major financial institutions in stress. Resolution regimes have been strengthened, more funds are available to absorb losses (total lossabsorbing capacity, or TLAC), and risks are better priced in markets. However, the financial sector continues to benefit from implicit subsidies.