4 The state of too-big-to-fail More research is also required to examine one of the central promises made in the aftermath of the financial crisis – the promise that taxpayers will not be on the hook again for losses incurred by banks: the promise to end too-big-to-fail. Ending too-big-to-fail is not only a question of fairness.
It is elementary for the functioning of financial markets, as it restores proper incentives. Much has been done to remedy the issue. Higher capital requirements, resolution regimes, standards for loss-absorbing debt instruments are all important in our efforts to do away with implicit subsidies to banks. But we need to find out exactly how far we have come.