Systemically Important Financial Institution (SIFI)
A firm whose collapse could threaten the entire financial system.
Detailed Description
Systemically Important Financial Institution (SIFI)
What is a Systemically Important Financial Institution (SIFI)?
A SIFI is a financial institution whose failure could trigger a financial crisis or severely impact the economy due to its size and interconnectedness.
Why are SIFIs important to the economy?
SIFIs are crucial for credit intermediation, liquidity provision, and the functioning of financial markets; their failure can disrupt the financial system.
What regulatory framework governs SIFIs?
SIFIs are subject to enhanced regulatory scrutiny, including higher capital requirements, stricter liquidity standards, and comprehensive stress testing.
Can you provide examples of SIFIs?
Examples of SIFIs include JPMorgan Chase, Bank of America, Citigroup, Deutsche Bank, AIG, and MetLife.
What risks are associated with SIFIs?
SIFIs face risks such as credit risk, market risk, operational risk, and liquidity risk, which can threaten financial stability.