Using an options-based approach, we compute the value of the state guaranteefor the liability side of CS and UBS. The insurance premiums forthese two system-relevant banks are calculated in a dynamic setup from2004 until 2009 in quarterly steps for time horizons of one and five years.The model...

The persistence of financial instability calls into question the adequacy of the current regulatory regime. Acritical review of the three pillars at the core of current financial regulation exposes some structural flaws.[...]