Mario Draghi, head of a global body of regulators known as the Financial Stability Board, said the problem of big financial firms that endanger the whole economy remains the biggest challenge for policymakers after the financial crisis.
"Basel III will greatly strengthen banking-system resilience, but it does not address this problem," Draghi said Friday.
Draghi, who is governor of the Bank of Italy and a board member at the European Central Bank, said the global economy still faces the problem of companies that are "too big to fail." Regulators must improve their ability to resolve big financial companies without disruptions to the financial system and without taxpayers' support, he said.
"Effective resolution regimes must … be able to impose losses on shareholders as well as creditors while ensuring continuity of essential financial functions," the central banker said, praising legislation recently approved in the United States for doing just that. "All countries should have a Dodd-Frank-style regime in place," he said.
