PDSnet Glossary

Term

Categories

Introductory Technical Fundamental Economics Opinion Sectors International Regulatory Other Markets

Versions

Name	synonyms = 1, variations = 2, abbreviations = 3

Publish: (0 = no, 1 = yes)

Definition

A financial institution that is so large and so integrated into the economy that its failure would be catastrophic. Systemically important financial institutions (SIFI) cannot be allowed to fail by governments because their failure would lead to a collapse of the financial system. The organisation is too big to be allowed to fail. Such organisations usually have to comply with additional regulations designed to ensure that they do not fail. During the 2008 sub-prime crisis, regulators became aware that certain very large and inter-connected financial institutions had been allowed to take on too much risk. In the United States the Financial Stability Oversight Council was established to ensure that such organisations were identified and regulated so as to prevent their failure.

Edit Glossary Term