Basel II largely appears to have served us quite well, although the banks’ initial modelling of capital requirements for both housing and rural lending was not sufficiently conservative, a point highlighted by the sharp fall in farm prices and earnings in 2008–09.
Resilience as adaptability The second element of resilience is the ability of the financial system to adjust to new conditions. This holds for both the system and those who oversee it. As banks adapt to a range of technological, structural, and environmental challenges, the regulatory framework needs to adapt as well.