The crisis has also pointed to the need to enhance the framework for cooperation in financial regulation and supervision in Europe. As a result, micro-prudential supervision will be reinforced with the creation of a European System of Financial Supervisors, including three new European supervisory authorities in banking, insurance and securities.
Much more controversial is the question of how developing and emerging-market countries should resolve the trilemma. Some might argue against these countries’ choosing to allow free capital mobility on the grounds that rapid reversals in international capital flows have induced balance of payments crises and difficult domestic adjustments for them in the past.