Systemically important financial institutions (SIFI) are financial institutions that are deemed systemically important to the economy in the sense that the failure of one of them could trigger a global financial crisis. The prevention of their collapse and the limitation of the consequences of a collapse are important as a means of protecting the financial system. New regulations are being discussed at the Basel III banking accords in Switzerland, [1] which are going to be finalized by the end of 2011. The regulation involves large banks holding more capital as measured in Tier 1 capital.
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As of November 2011, there is no consensual definition of what a global systemically important bank is.[2] The Basel Committee has adopted a series of indicators that reflect the size, interconnectedness, the lack of readily available substitutes of financial institution infrastructure, their global (cross-jurisdictional) activity and their complexity. In some cases, expert judgment can supersedes the indicators.
The list, published by the Financial Stability Board contains 29 big financial istitutions (including 17 European firms, 8 US firms and just 4 Asian[3]), Globally Systemically Important Financial Institutions. This list will be updated annually and published in November every year (G-SIFIs).[4] The current list has been established using end-2009 data. This means that the list may include some banks whose significance has decreased (most notably Dexia).