Treasury Committee questions European banker

04 March 2010

The Treasury Committee holds the last evidence session of its inquiry into the 'Too Important to Fail?' dilemma on private financial institutions. Watch live from 9.45am.

Witness

9.45am

  • Baron Alexandre Lamfalussy, European economist and banker

At the height of the financial crisis, Governments authorised a massive injection of public funds to rescue ailing private financial institutions in order to prevent a collapse of the financial system.

There is general agreement of the need to minimise the risk of this re-occurring both because of the cost to the public purse, and because, for many commentators, the implicit assumption that Governments will step in to support private financial institutions that are simply ‘too important to fail’ will drive excessive risk taking such as that which created the crisis.

The Committee is taking evidence on the extent to which the structure of the current financial system should be reformed, and certain activities regulated, on the grounds of systemic risk.

Image: Thierry Charlier/AP/PA

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