flexible way to grow. 10 the relative importance of customer loans fell over time and the importance of interbank lending grew. moreover the customer loan business was transformed as many banks particularly in the us moved away from the “ originate and hold until maturity ” model to the “ originate and distribute ” model where granted loans were pooled, then securitized, and sold anderson and joeveer ( 2012 ), bankers and bank investors : reconsidering the economies of scale in banking, cepr discussion paper 9146 philippon and reshef ( 2012 ), skilled biased financial development : education, wages and occupations in the u. s. financial sector, nber working paper series 13437 stein ( 2012 ) and bolton, santos, and scheinkman ( 2012 ), respectively noss and sowerbutts ( 2012 ), bank of england fs papers series, fs paper no 15 davies and tracey ( 2012 ), too big to be efficient? the impact of implicit funding subsidies on scale economies in banking, bank of england mimeo boyd and heitz ( 2012 ), the social costs and benefits of too - big - to - fail banks : a'bounding'exercise, university of minnesota working paper, february boot and ratnovski ( 2012 ), banking and trading, imf working paper 12 / 238 bis central bankers ’ speeches to investors, including european banks. securitization was motivated by the desire to economize on capital buffers, but it turned out later that the assumed benefits of diversification were vastly outweighed by the increasing propensity to contagion. the increasingly long and opaque chains of claims and the exposures to entities in the shadow banking system made banks and the financial sector as a whole vulnerable to shocks. 11 big risks followed, also at the systemic level, as balance sheet growth was often matched with dramatic changes in the liability side of banks ’ balance sheet. firstly, banks became increasingly leveraged as the solvency rules allowed this to happen without a proportionate addition of fresh capital. this was particularly true in the case of capital requirements for market and counterparty risk. furthermore, the more frequent use of internal models resulted in lower capital requirements. the loss absorption capacity weakened. second, banks relied increasingly on short - term wholesale funding, typically from the repo market, which made them more vulnerable to market disruptions. thirdly, the rapid balance sheet growth also required more interbank financing, which

" plans, or plans that automatically enroll workers, have significantly higher participation rates than plans that require workers to sign up. not surprisingly, employers have responded by making automatic enrollment more prevalent : a recent survey found that nearly a quarter of large plans either have adopted automatic enrollment or are considering adopting it. but automatic enrollment may not be enough, since automatically enrolled employees often give little attention to the default options of the plan. one study found that half of automatic enrollees had not moved from the defaults even three years after enrollment. this could be a problem because default contribution rates, which are typically 3 percent of pay, are often too low to allow workers to take full advantage of employer matches, let alone to build sufficient assets for retirement. in fact, there is some evidence that the low default rates reduce contributions among workers who would likely have saved more in the absence of the default. finally, the default investment choice in automatic enrollment plans is typically the least risky, such as a money market or stable value fund. while these investments are especially safe, their expected returns may be too low to achieve long - term retirement security. subsequent research has highlighted how employers might improve their automatic enrollment plans. for example, they might set higher default contribution rates and greater default exposure to a diversified set of higher - yielding assets. another possibility is to bring new employees on board with low contribution rates - just as is often done currently - but then to nudge contribution rates up as the workers receive pay raises. some studies have shown that workers are willing to pre - commit to such a plan, which eventually results in significantly higher rates of savings. but along with these new opportunities for employers come difficult new questions. how high should their employees'savings rates go? in an ideal world, all employees would be making well - informed savings decisions and wouldn't need any encouragement from their employers. but, in reality, a plan's design affects the financial well - being of its participants. and though a default savings rate of 3 percent of pay might seem too low, an employer is not necessarily in a good position to know what the appropriate saving rate should be. a high default rate may be inappropriate, particularly if employees respond by dissaving outside their retirement plan. vanguard center for retirement research. vanguard participant monitor : expecting lower market returns in the near term, december 2001. brigitte madrian and dennis shea, " the power of suggestion : inertia in 401 ( k ) participation and savings behavior, " n