Lancaster professor takes role in evaluating ‘too-big-to-fail’ financial reforms

Professor Vasso Ioannidou

A Lancaster University professor has been appointed to a position in assessing how reforms to the world banking system have fared since the global financial crisis.

Professor of Finance Vasso Ioannidou will serve as an academic advisor to the Financial Stability Board’s evaluation of ‘too big to fail’ (TBTF) reforms.

Following the worldwide events of 2007/08, the G20 launched a comprehensive programme of financial reforms to increase the resilience of the global financial system, while preserving its open and integrated structure.

The changes affected systemically important banks (SIBs) deemed too important to national or global economic structures to be allowed to fail, putting pressure on governments to use public money to bail them out should that happen.

With the core reforms in place, the FSB has launched a systematic analysis of their effects. The evaluation will assess whether they are reducing the systemic and moral hazard risks associated with SIBs, while also examining the broader effects of the reforms on the overall functioning of the financial system, and any unintended consequences that have arisen because of their introduction.

Professor Ioannidou is one of three academic advisors appointed by the FSB until the end of 2020 to help with the evaluation. She will assist in the design of the analyses, data collection and use, and interpretation of the findings, taking part in meetings in New York and Basel with the team.

She said: “It is an honour to be selected for this role by the FSB. The too-big-to-fail reforms were brought in at the behest of the G20 to address the systemic risks associated with important financial institutions failing, and it is important that we evaluate whether they are achieving their intended objectives.”

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