The primary need for regulation arises from the fact that consumers of financial services are not in a position to evaluate the soundness and safety of financial entities since even the most stringent laws regarding enforceability of contracts cannot protect for post-contract-signing behaviour.
They have also increased the supply of longer-term funding, sometimes in an internationally coordinated manner. In addition, central banks have extended both the range of eligible collateral for their lending operations and the range of eligible counterparties for collateralised lending.