complex or too important to fail. see e. g. adrian and shin ( 2010 ) : “ the changing nature of financial intermediation and the financial crisis of 2007 – 09 ”. see e. g. shin ( 2012 ) : “ global banking glut and loan risk premium ”. see e. g. acharya, schnabl, and suarez ( 2010 ) : “ securitization without risk transfer ”. see e. g. haldane ( 2010 ) : “ the $ 100 billion question ”. bis central bankers ’ speeches in a market environment where the price of a bank ’ s own debt funding is insensitive to the risks the bank takes and decreases with the bank ’ s size, the bank has a strong incentive to further increase its leverage by taking on even more debt and continue to grow in size. the implicit subsidies also have important implications for the level - playing field in the banking sector. currently, the competitive distortions, manifested in differences in funding costs between systemically important banks and other banks, are significant. however, our goal must be that no bank is perceived as too big to fail. as stephen cecchetti recently noted, “ there should come a day when the basel committee ’ s list of globally systemically important banks, or g - sibs, is blank ”. 7 lack of a systemic aspect there was clearly also a lack of a sufficient macro - prudential aspect to banking supervision and regulation prior to the crisis. the fundamental problem is that banks themselves do not have an incentive to fully internalize the social cost stemming from their own contribution to system wide risks into their business decisions. 8 in the absence of substitutive regulatory and supervisory measures in the years preceding the crisis, systemic risks built up in the form of ever larger, more complex and more leveraged financial institutions. regulatory response to the crisis what has already been done? in response to the crisis, a number of international and eu wide regulatory reforms have been launched. two reform areas have been particularly relevant to the work of the high - level expert group ; capital adequacy and liquidity requirements ( basel iii as implemented in the eu through the crd iv / crr ) and recovery and resolution ( as in the commission ’ s proposal ). if effective, the new and still evolving capital adequacy requirements can go a long way to reduce incentives to take excessive risks across different banking operations and the use of excessive leverage

financing the european economy. as a result, complete separation similar to the former glass - steagall act in the us was not required. as the deposit bank and the trading entity are allowed to co - exist within a holding company structure, the banking group could still market all of the services, from its different constituent units. concluding remarks the reputation of banks and the public trust that they rely on has been severely dented during the latest financial crisis. this has hurt not only banks themselves but also the economies and societies of europe and the whole western world. trust and public acceptance must now be restored, and the proposals which the high - level expert group has submitted for the consideration of the eu commission will contribute to this end. achieving this important aim will benefit the banking industry and our societies at large. bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches