Operational Failures and Financial Crises

Document Type

Article

Publication Date

3-25-2020

Abstract

Past financial crises have been characterized by panics, runs, and restrictions on the availability of credit, and our crisis prevention measures (including capital regulation, deposit insurance, and the lender of last resort) have been adopted in light of this historical experience.[1] These forms of financial stability regulation pay limited attention to operational risks, however, and as the technologies by which financial services are delivered become increasingly complex, operational risks may become a transmission mechanism as well as a source of financial distress. In the future, financial crises may look more like a rolling blackout than a bank run.

Source Publication

The CLS Blue Sky Blog

Link to Full Text

Share

COinS