# Bank failure prevention

- Canonical URL: https://www.gerhardmerk.de/bank-failure-prevention
- Post ID: 593163
- Modified: 2023-07-25T21:00:31+00:00
- Language: en

## Definition

In the financial crisis that followed the subprime crisis, it became clear that banks worldwide need to be made more resilient to possible distortions. The main ways of doing this are: - a higher equity ratio at the institutions; - larger liquidity cushions, practically corresponding credit balances at the central bank, because these, and only these, can be drawn on immediately even in the event of market failure; - thorough risk management that sets warning signals in good time; - more precise, internationally coordinated and legally secure monitoring of the institutions and markets by the supervisory authorities; national and global supervisory gaps must be closed; - perhaps also a separate insolvency law for banks. - See resolution mechanism, unified, supervisory avoidance, banking supervision, European, bank scolding, bank testament, Basel-III, capital buffer, variable, International Business Company, leverage ratio, managed bank, Sifi oligopoly. - Cf. BaFin Annual Report 2011, p. 154 f. (strengthening capital adequacy; details), Financial Stability Report 2012, p. 90 f. (countercyclical capital buffer for loans). Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

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