Financial regulatory reform: accomplishments, pitfalls, prospects

BIS Annual Economic Report  | 
26 June 2011

Progress on financial regulatory reform has been impressive. International agreements on stronger capital requirements and new liquidity standards for banks have been reached quickly. Still, a number of critical steps remain. Among these are the full and timely implementation of Basel III; the adoption of measures to address the systemic risks associated with very large global financial institutions; and the design of regimes to ensure the orderly resolution of such institutions in the event of their failure. But the target will keep moving as institutions resume risk-taking and adapt their business models to the new environment. The supervisory framework must be able to keep up, monitoring and managing risks to financial stability regardless of the given perimeter of regulation.