Meredith Whitney, a financial analyst who foretold the banking crisis, thinks America's states could be the next source of systemic financial risk.
To that end, the Society of Actuaries and the Casualty Actuarial Society hosted a call for essays, " Systemic Risk, Financial Reform, and Moving Forward from the Financial Crisis, " seeking to find solutions that would prevent a future systemic meltdown.
Among other things, it sets up a Financial Stability Oversight Council to oversee systemic risk in the economy, creates an independent consumer financial protection bureau housed within the Federal Reserve and establishes exchanges for the trading of over-the-counter derivatives.
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Thanks to recent financial industry regulations that require systemic risk management, GoldenSource could capture the growth opportunity of meeting the need for federal financial regulators to know the extent to which specific banks are exposed to each other at a macro level.
As risks get more concentrated, the systemic risk to the financial system rises.
Mr Verberke said that steps would be taken to address the underlining structural imbalances which triggered the financial crisis in Europe, by introducing planned financial supervision and systemic risk assessments.
Most financial talk treats systemic risk as a matter of exogenous events, sort of like comets that originate outside the normal operations of the solar system, unpredictably appearing, flashing across the sky and then suddenly disappearing.
Some events are large enough to pose systemic risk, that is risk to the entire global financial system.
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And so, instead of helping to cushion for the mistakes of the banks for systemic risks, the regulations increase the probabilities of systemic risk being missed and the ensuing catastrophic financial consequences.
"Systemic risk" (the risk that the failure of one financial institution could cause other interconnected institutions to fail and harm the economy as a whole).
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The politicians who dreamed up the directive talk about systemic risk, a concern for financial stability.
As, in fact, the person who was in charge of Systemic Risk Assessment Division within the Financial Stability department from 2005 should have known in fact.
Government assistance to the banking system should be based on solely preventing systemic risk that would endanger the entire financial system and the economy.
We need much greater global coordination of financial regulation, facing up to systemic risk and ensuring that market participants are not able to play one regulatory jurisdiction against another.
The Financial Reform Bill of 2010 creates new systemic risk regulation.
If these products that got to be so large can have that much impact on systemic risk in the U.S. financial system, I think the dealers have to accept that central clearing and some transparency is a price of wanting to be in those businesses.
The regulation and supervisory oversight of financial institutions is another critical tool for limiting systemic risk.
Moreover, there is no evidence that the ILCs of non-financial companies played any part in the financial crisis, or that they pose any systemic risk.
That they are shoring up a firm too small to pose a systemic risk betrays a continuing lack of confidence in the financial system's ability to absorb even modest shocks.
But equally, without the flood of money seeking returns, the risky financial instruments that the IMF is blaming for increasing systemic risk may not have grown and posed the risk that they did.
The same could be said of the Dodd-Frank law, which gives new and expanded federal bureaucracies vast, new discretionary power with which to control the financial services industry and any other company they deem a systemic risk.
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If we define a systemic risk event as something large enough to affect the entire global financial and economic system, then you would think that the best time for investors to be told about these terrible events is before they occur.
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Now's their chance to see regulations put in place to minimize systemic risk, so that one company doesn't drag down the financial system.
But Charles W. Calomiris, Henry Kaufman Professor of Financial Institutions at Columbia University, said the committee believes alternative approaches can control the systemic risk the banks present without stifling innovation or driving it offshore.
If there is a systemic risk in South Korea, it stems from the government's ceaseless efforts to tell financial institutions where to lend.
Liquidity provision by the central bank reduces systemic risk by assuring market participants that, should short-term investors begin to lose confidence, financial institutions will be able to meet the resulting demands for cash without resorting to potentially destabilizing fire sales of assets.
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