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Costs:

• Limited Innovation:Regulatory hurdles can stifle innovation by making it difficult for new fintech companies and alternative financial models to compete with established banks.
• Increased Costs:Compliance with regulations adds to administrative burdens for banks, potentially leading to higher fees for consumers.
• Moral Hazard:Extensive regulations might encourage riskier behavior as banks perceive themselves as “too big to fail,” relying on government bailouts in case of collapse.

Finding the Balance:

The key lies in striking a balance between ensuring stability and fostering a dynamic financial system. Streamlining regulations, focusing on risk-based approaches, and encouraging responsible innovation can help mitigate the costs while maintaining the core benefits of a secure banking system