Systemic risk, governance and global financial stability

The paper argues that while attempts have been made to reform four of the five key pillars of banks’ operation, (i.e. competition, resolution, supervisory, and auditing and valuation policies), less attention has been paid to the role of bank governance and systemic risk, despite a strong link between governance and risk-taking. The paper offers four solutions to strengthen bank governance. First, the regulatory capital base of banks could be...