REDEFINING AND CONTAINING SYSTEMIC RISK

摘要: Official definitions of systemic risk leave out the role government officials in generating it. Policymakers’ support creative forms risk-taking and their proclivity for absorbing losses crisis situations encourage opportunistic firms to foster exploit incentive conflicts within supervisory sector. To restore faith diligence, competence, integrity responsible managing financial safety net, reforms need rework incentives sectors. The goal should be align private managers, accountants, credit-rating firms, supervisors with those ordinary taxpayers. This article describes a series complementary ways advancing toward this goal. most important steps would measure regulatory performance terms its effect on loss exposures that net passes through taxpayers require institutions benefit from produce information effort. entails estimating explicit implicit safety-net benefits individual receive issuing extended-liability securities whose prices improve accuracy these estimates.