The Financial Stability Board is proceeding with the design of new regulatory arrangements that can give us a financial system with more capital, less debt, controls covering all intermediaries that may potentially generate systemic risk, mechanisms to limit the cyclicality of the financial system, and methods of governance and executive compensation designed to reduce the incentive for excessive risk-taking.
In a word, a more prudent and more stable financial system better able to sustain the economy. We need to introduce new rules to improve the quality of capital and to curb the excesses of leverage, including the imposition of a leverage ratio. There will be major corrective measures to mitigate the procyclical tendencies of the system.