BIS central bankers’ speeches  1  Joseph Stiglitz and his co-authors, for instance, find that financial crises have become more frequent since deposit insurance systems were introduced and central banks were established as the lenders of last resort.2 From this, we can conclude that moral hazard plays an important role in the way banks deal with risk.
The crisis has shown that we are faced with a situation in which “heads, the bank wins; tails, the taxpayers lose”. Liability and control are off-kilter and this reduces banks’ incentives to manage risks prudently – hence their will to see in the dark is diminished.