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Economic Brief

July 2009, No. 09-07

Systemic Risk Regulation and the "Too Big to Fail" Problem

Borys Grochulski and Stephen Slivinski

A single regulator tasked with preventing threats to systemic stability would need to have considerable power and discretion. But creating such a powerful entity could reinforce the moral hazard problem resulting from the idea that some firms are too big to fail.

Additional Resources

Financial Regulatory Reform — A New Foundation: Rebuilding Financial Supervision and Regulation. Washington, DC: Department of the Treasury, June 17, 2009."

The Role of the Safety Net in the Financial Crisis," Speech by Jeffrey M. Lacker to the Asian Banker Summit, May 11, 2009

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