During the financial crisis, extensive government bank bailouts were necessary in many countries in order to sustain economic activity. When the bridge is unsteady, the authorities need to stabilise it. But when taxpayers foot the bill, banks take on excessive risk. Not until owners have to bear losses will banks’ balance sheets fully reflect risk. To achieve this, there is an international effort to improve tools for dealing with crises. It should be possible to wind up banks without causing major economic shocks and without governments assuming banks’ losses. Those who take risks must also bear them. BIS central bankers’ speeches  7  There are high ambitions behind the new financial regulations. However, it would be unrealistic to believe that we can eliminate all sources of financial turmoil. Unlike the sergeant, we cannot give the “route step march” command to break the cadence when bridges are to be crossed. Our ambition is not to control every step on the bridge. But we can make considerable headway by reinforcing the foundations of the financial system and cushion the load from marching in step. Conclusion I began by quoting Nicolai Rygg’s annual address from 1932. Near the end of his speech, he turns his gaze towards the future: “Unfortunately, not much can be said about the outlook for the coming year. It appears to be shrouded in darkness.” Rygg was referring to the international credit crunch and what he called “intricate political questions”.
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