A core characteristic of any well-functioning market economy was absent from the financial sector, namely the threat of failure. Large banks operated with implicit government support that distorted their incentives for prudent behaviour and eventually cost taxpayers billions of euros. Therefore, the regulatory reforms aim to reintroduce the principle of individual failure into the financial system.
To reach this objective we have to establish mechanisms that allow banks to fail without disrupting the entire financial system. We have made significant progress both at the European and at the global level. And although we have not yet reached our objective, I am confident that we will eventually do so. Thank you. 2  BIS central bankers’ speeches