The surcharges were put in place because the material distress or failure of a G-SIB would have an adverse impact on the financial system as a whole that is far greater than the impact on the financial system of the distress or failure of a non-G-SIB firm. 15 Accordingly, G-SIBs should face capital surcharges that compel internalization of those external costs.
If we had simply tried to maintain the production structure of the past, with its greater concentration on lower-value added traditional activities, it is implausible to suggest that the economy could have performed in the manner that it has. In fact, Ireland tried to pursue this approach up until the late 1950s with unsatisfactory results.