8857685955

Vladislav Pavlat

University of Finance and Administration, Prague, Czech Republic

RE-SHAPING THE GLOBAL FINANCIAL ARCHITECTURE: DUAL SIFIS’ ROLE

Introduction

The aim of the paper is to discuss the emerging theory of systemically im-portant financial institutions (SIFIs), and the role these big entities are playing. The author briefly describes the gradually process of defining the crucial con-cepts: “systemie risk” and “systemically importance” which enables to find a feasible way of SIFIs’ measurement and SIFIs’ selection. Then a set of regulatory measures on SIFIs in preparation (within the framework of the Basel III) is presented and the dual role of SIFIs is defined.

1. Systemie Risk

The big Financial companies are considered to be „significant”, if they are able to influence the State of a system - an industrial branch, national economy or intemational economy. The activity of any company is connected with certain risks; if the company is unable to manage its risks, it will - sooner or later - fail. Systemically important institutions cannot be defined without having a definition of a systemie risk.

Since the beginning of the 2 lst century, many different definitions and/or characteristics of systemie risk can be found. New features of systemie risk were discovered. At present, we are able to enumerate some new elements from which a morę meaningful definition of systemie risk could be put together. I tried to arrange the elements of systemie risk as a complex phenomenon (Table 1).

The joint FSB/IMF/BIS report to the G-20 defines systemie risk as “a risk of disruption to financial services that is (i) caused by an impairment of all or parts of the financial system and (ii) has the potential to have serious negative