Complicity in Complexity : What to Do About the ‘Too-Big-To-Fail’ Problem

The intense discussion of the ‘too big to fail' syndrome has diverted attention from the equally important issue of complexity. Size alone does not matter. It is the complexity of the legal structure of cross-border financial groups and the high degree of integration of their operations that make quick and orderly wind-downs impossible. Resolutions will be easier if legal form follows economic function. Supervisors should require financial groups to adopt structures that are compatible with rapid and effective wind-downs under existing or newly established national resolution regimes. This article suggests that policymakers give more attention to how the complexity of the legal structures of institutions affects the resolution process