Breaking up the Bank: Alternative Proposals to Separate Banking Activities. A Critical Analysis

Since the onset of the recent financial crisis, discussions have been taking place around a set of proposals with a view to reducing the probability that 'it could happen again’. Along with new rules related to bank capital and liquidity buffers, the hyper-speculative exposure of some financial players has stimulated a debate on the recommendations that commercial banks and depositors should be ring-fenced. Theoretical assumptions and pros and cons of these proposals are compared, to conclude that a mixed regulatory model based on prudential and structural rules could fail the purpose to make the financial system both safe and efficient.