Banking Regulatory Reform: Too Big to Fail and What Still Needs to be Done

Abel Mateus, Dec 22, 2011

Although important reforms have been undertaken in the United States and the European Union in the aftermath of the Great Financial Crisis of 2007-2009, major areas still need to be addressed. The Vickers Commission proposes a set of measures to solve the problem of too big to fail in the United Kingdom. The proposal centers around the idea of ring fencing commercial banks and defining capital requirements separately for this compound. This paper discusses the pros and cons of the Vickers Commission proposal, comparing it with the Volcker rule, and problems of implementation. Complementary policies yet to be studied are also proposed.

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• Banking Regulatory Reform: “Too Big to Fail” and What Still Needs to be Done