The opaque innovations of the recent past, rather than eliminating market inefficiencies, unintentionally created systemic risks.
Regulators could get managers to watch for systemic risks by linking their bonuses to the bank's bonds.
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There is no evidence that institutions of this size add sufficient value to offset the systemic risks they pose.
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And relative rankings may remind lenders that they must worry about systemic risks, encouraging more responsible lending practices in the next cycle.
An essential element in a new regulatory framework, then, is that systemic risks have to be measured, priced and regulated.
We're going to have to decide how to deal with systemic risks.
The thinking here is that the bond price sold off because of systemic risks at the core economies, not because of Russia.
If confirmed, Mr. Lew will chair the Financial Stability Oversight Council, responsible for identifying and addressing "systemic risks" to the financial system.
"The sheer complexity, opaqueness and systemic risks embedded in the new markets have enormously complicated both official and private responses, " Volcker pointed out.
"We need first and foremost to avoid systemic risks, to limit the negative impact of these financial tensions in our real economies, " he said.
So I think we are addressing the fundamental -- as we call them, the systemic risks associated with hedge funds, derivatives, and some of those others.
What remains to be seen is measures being taken now and in near future to make these markets increasingly streamlined and to prevent them from becoming systemic risks.
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However, in the rare circumstances in which the impending or actual failure of an institution imposes substantial systemic risks, the standard procedures for resolving institutions may be inadequate.
Allowing big banks to get bigger only increases systemic risks.
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The challenge now is to design a regulator for the finance industry that actually measures and focuses on systemic risks, rather than on the individual parts of the system.
An alternative approach, which has been called system-wide or macroprudential oversight, would broaden the mandate of regulators and supervisors to encompass consideration of potential systemic risks and weaknesses as well.
And aggressive monetary easing measures like QE-to-infinity are reducing the systemic risks and ensuing swings in investor positioning that have dominated markets since the start of the great recession.
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.
We'll set and enforce clear rules of the road, close loopholes in oversight, charge a new agency with protecting consumers and address the dangerous, systemic risks that brought us to the brink of disaster.
Put differently, megabanking creates systemic risks so big in scope and scale that the only rational policy response is to respond with regulations that actually strengthen the characteristics of the system, intensifying the risk.
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Investors who think this trend is bound to reverse, especially once the systemic risks posed by the U.S. and Europe start to subside, might consider Brazil real estate equities, or global REITs, worth a buy.
The Conservatives would create a Financial Regulation Division within the Bank of England and a Financial Policy Committee similar to the rate-setting Monetary Policy Committee, which would monitor systemic risks and have the power to break up banks.
The regulators were concerned not only about individual banks but also about the systemic risks associated with excessive industry-wide concentrations (of commercial real estate or nontraditional mortgages) or an industry-wide pattern of certain practices (for example, in underwriting exotic mortgages).
No wonder, experts think that dark pools can, anytime, blow splinters of systemic risks into the global economy, very much like how the sub-prime lending-induced contagious risks reared their ugly heads to trigger the largest financial crisis since the Great Depression.
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"The decision to divide responsibility for assessing systemic financial risks between three institutions meant that in reality no-one took responsibility, " he told MPs.
But free markets are inadequate or fail altogether in the allocation of public goods, in addressing systemic and catastrophic risks and economic externalities.
But free markets are inadequate or fail altogether in allocating public goods efficiently and effectively, in addressing systemic and catastrophic risks, and in dealing with economic externalities.
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On the contrary, the electric grid has become a cautionary tale for the risks of systemic collapse.
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Monday, New York Fed chief Timothy Geithner, the architect of JPMorgan Chase's (nyse: JPM - news - people ) rescue of Bear Stearns in March, was drumming up support for greater regulation of Wall Street firms to lessen the risks of systemic meltdown.
Olli Rehn, the EU economic policy commissioner, has repeatedly said the island's bank problems pose risks of a "systemic nature" to the euro zone.
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