By a Key Measurement Interconnectedness has Fallen

By a Key Measurement Interconnectedness has Fallen

As reported Wednesday in Politico’s Morning Money, Better Markets’ Dennis Kelleher emailed: ”Cherry picking data and quotes won’t end the too-big-to-fail threat, which remains alive and well where (1) there are still no credible domestic or international resolution regimes or plans; (2) interconnectedness remains at all-time highs;…”

We calculated the measure of interconnectedness developed by the Basel Committee and used by the U.S. banking agencies to determine the additional capital a bank must hold because of its systemic footprint. As shown in the graph, rather than being at an “all-time high,” by this measure interconnectedness has fallen 14 percent since the statistic began in 2012.



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