In response, national prudential regulators represented on the Basel Committee on Banking Supervision have developed new standards to enhance the stability of the global financial system. In July 2009, the Basel Committee adopted more stringent regulatory capital standards for trading activities and securitization exposures. Subsequently, in December 2010, the Basel Committee published its Basel III framework.
The stronger the financial system, the easier it is for a virtuous cycle to operate, whereby improved profits and ongoing structural adjustment keep driving firms to even greater heights of activity. Economic fluctuations in Japan are also expected to exhibit less volatility, coming into line with the trend in other major industrialized countries.