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Updated 07:42 25/09/20

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Banks need 1 Trillion dollars to prevent another Lehman

Duncan Richardson, News Editor
11 Nov 2015, 12:14 p.m.

Seven years after the collapse of Lehman Brothers the finance system still needs to raise a further $1.2 trillion to stop a bank failure bringing down the global financial system.

According to the Financial Stability Board, the banking system needs an injection of $1.2 trillion to ensure today's banking giants can be wound down without the need for a taxpayer bailout.

The recommendation comes after years of work by the board and calls for the world’s largest 30 banks to increase their capital cushions. Since the 2008 banking crisis, the industry has consolidated into a number of big players and the report concludes HSBC and JP Morgan are currently too big to fail as they play such a pivotal role in the global economy.

The report outlines a number of recommendations designed to force institutions to stop relying on risky short-term funding which can evaporate quickly in a crisis.

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