Systemically Important Financial Institutions (SIFIs)

Systemically Important Financial Institutions (SIFIs) are large banks or financial entities whose failure could significantly disrupt the financial system and economy. Because they are interconnected with many other financial institutions, their stability is crucial. If a SIFI faces serious problems, it can lead to wider economic issues, like job losses and decreased consumer confidence. To prevent this, regulators closely monitor these institutions and may impose stricter rules to ensure they have enough capital and risk management practices in place to withstand financial stress.