First line of defence for risk management has to come from bank managements and specially from bank boards. Assessment and planning of capital adequacy by banks is key to ensuring that banks remain resilient to risks and shocks.
To eliminate those costs on taxpayers and to promote market discipline, G-20 countries are taking several steps. 2  A recent study by the International Monetary Fund finds that this implicit public guarantee effectively lowered the borrowing costs of banks in 14 advanced countries by approximately 60 basis points in 2007.