The Basel Committee on Banking Supervision (BCBS) and the Financial Stability Board (FSB) are currently engaged in devising a framework for regulating and supervising systemically important financial institutions (SIFIs). SIFIs, as is well known, were at the centre of the recent crisis.
Since they are “too big to fail” and “too interconnected to fail”, they had to be rescued at a huge cost to the tax payers. The international level work, currently in progress, is engaged in identifying ways to reduce the moral hazard of SIFIs, defining the criteria for their identification and designing differential capital and liquidity surcharge for them. 36.