This chapter describes the indicator-based measurement approach for assessing the systemic importance of global systemically important banks (G-SIBs).

Version effective as of 01 Jan 2027

Methodology updated to give effect to the changes to the G-SIB framework published in July 2018, the change to the review process published in November 2021 and technical amendments published in November 2023.

Introduction

40.1 The negative externalities associated with institutions that are perceived as not being allowed to fail due to their size, interconnectedness, complexity, lack of substitutability or global scope are well recognised. In maximising their private benefits, individual financial institutions may rationally choose outcomes that, on a system-wide level, are suboptimal because they do not take into account these externalities. Moreover, the moral hazard costs associated with implicit guarantees derived from the perceived expectation of government support may amplify risk-taking, reduce market discipline and create competitive distortions, and further increase the probability of distress in the future. As a result, the costs associated with moral hazard add to any direct costs of support that may be borne by taxpayers.