In addition, the Federal Reserve will propose capital surcharges on firms that pose the greatest systemic risk and will issue a proposal to implement the Basel III quantitative liquidity requirements as they are phased in over the next few years.
But the question remains whether we have done enough to reduce the drawbacks without sacrificing the benefits. Another important reason for financial instability with potentially serious macroeconomic costs continues to be overextension in balance sheets in boom periods, which is often an indication of excessive risk-taking. We have learned that this can be masked by a vigorous economy.