how to deal with big banks..?

Banks have played a very important role in modern economic development. The process of mobilization of capital for investments serves as lifeline of modern economies. It has reduced the transaction costs associated with the flow of money from savers to investors. However, modern banks have grown large in size and they wield considerable influence over their national government. There is an implicit sovereign guarantee which ensures the survival of these banks even in the worst of crisis. Generally,the cost of allowing these banks to fail far exceeds the pain of burden on ordinary taxpayers in the case of bailouts. Its amazing that these banks enjoy all the fruits in the times of success like hefty bonuses etc but the the entire society is made to bear the loss in case of bank failures. As a result, many of these banks engage in excessive risks in the absence of proper accountability . It has been suggested that large banks can be broken into smaller ones but it might increase the cost of doing business in the absence of such synergies.

The balance sheet of many banks has gone up even after this financial crisis. France based , BNP Paribas, the world's largest bank by asset has amassed assets to the tune of some $3.5 trillion .Similarly, London based ,Barclays has assets to the tune of $2.6 trillion. Many of these banks have made commitments to reduce the size of their balance sheet over the next few years. Secondly, it appears that there is a broad macroeconomic factor which can't be handled at the level of individual banks but it ultimately drives the health of global banking system .

A global banking forum needs to be established to address such issues which should be able to measure the systemic risk in the banking system as a whole and accordingly policies can be tuned by the respective central banks. It should be more of a dynamic approach based on real time monitoring rather than calculating some vague numbers once a year. Finally, we need to have stringent regulations for capital adequacy norms which optimizes efficient banking operations with stability.