In the aftermath of the 2008 financial crisis it became clear that regulators had allowed many financial services firms to become “too big to fail”. Yet this system-critical firm problem is not confined to financial services. In their paper “Can electricity companies be too big to fail?” Ann van Ackere, Erik R. Larsen and Sebastian Osorio explain how a similar challenge faces the electricity sector, and offer some suggestions to help regulators prevent the lights from going out.
Diane Pierret and Roberto Steri share a keen research interest in the regulatory environment for banking as is evident from their recent co-authored paper Stressed Banks. In this Q&A, they talk about the paper, the post-crash regulatory environment for banking, and some potentially serious implications of the proposed Financial CHOICE Act in America, both for risk taking in US banking and the stability of the global financial system.