Review:
Systemically Important Financial Institutions (sifi)
overall review score: 4.5
⭐⭐⭐⭐⭐
score is between 0 and 5
Systemically Important Financial Institutions (SIFIs) are financial institutions whose failure could pose a systemic risk to the global financial system.
Key Features
- Large size
- Interconnectedness with other financial institutions
- Complexity of operations
Pros
- Help identify institutions that are critical to the stability of the financial system
- Regulations aimed at SIFIs can help prevent another global financial crisis
Cons
- May create moral hazard as these institutions may feel they are 'too big to fail'
- Can lead to regulatory capture where these institutions wield undue influence over regulators