More than five years after the collapse of Lehman Brothers there are still global banks which could not be wound up successfully without causing damage, a Deputy Governor of the Bank of England warned today.
“I do not think we can say with confidence that we could resolve a failing global giant,” said Sir Jon Cunliffe who is responsible for financial stability. “Getting agreement on international standards to end ‘Too Big to Fail’ is perhaps the regulatory priority for the G20 Summit in Brisbane in November.”
Last year, Cunliffe’s predecessor Paul Tucker surprised many in the financial sector by saying a giant bank could now be wound down, albeit not totally smoothly.
Cunliffe said: “Regulators and supervisors who cannot trust the implementation of standards in other jurisdictions will defend stability in their own jurisdictions by raising barriers.
“Such action minimises the risk of international crises, but the cost is the rolling back of financial globalisation with less effective and efficient intermediation on global savings.”
