Word Spy - SIFI

SIFI

n. A financial institution so crucial to the economy that its failure could cause a financial crisis. [From the phrase systemically important financial institution.]

Example Citations:

The FSB list of 29 banks, known as "SIFIs," includes those judged to be the most globally important to the financial system by their size and complexity. The measures were agreed on by regulators to prevent any "systemically important financial institution" from failing and roiling the global economy.
—"Global regulators to subject 29 banks to stricter regulations," The Washington Post, November 4, 2011

Q: Is AIG part of the new regulation that came with the new Dodd-Frank legislation and the SIFI (systemically important financial institutions), or too-big-to-fail rules?

A: We don't know yet because that's one of the concerns the market has right now. We're not sure where we're going to come out on the federal landscape for SIFI regulations. So we don't know if we're going to be regulated as a SIFI.
—Maria Bartiromo, "AIG chief sees a 'core of strength' in U.S. economy," USA Today, August 14, 2011

Earliest Citation:

The place to begin is to establish an effective system of regulating the solvency and improving the transparency of systemically important financial institutions. I'm going to call them "SIFIs" from now on for short.
—Robert Litan, "Where were the watchdogs? The financial crisis and the breakdown of financial governance," Senate Homeland Security and Governmental Affairs Committee, March 4, 2009

Notes:

A variation on this theme is the G-SIFI, a global (or globally) systemically important financial institution, so-deemed because its failure could precipitate a global financial crisis:

The FSB also said "global systemically important financial institutions" should be required to hold larger reserves than smaller banks and be subject to greater scrutiny by regulators....

Once the list of "G-SIFIs" is complete, Mr. Draghi said in his report that he would propose by the end of 2011 additional measures that national authorities should use to keep any globally systemic firms they happen to regulate in check.
—Kevin Carmichael, "G20 forges ahead with 'too big to fail' controls," The Globe and Mail, November 12, 2010

In case you're wondering, the related phrase too big to fail isn't at all new, and in fact dates to at least 1908.

Categories:

Economics
Globalization
Acronyms and Abbreviations

Posted on February 1, 2012