For instance, the effectiveness of crisis management and resolution largely depends on the existence of an efficient supervisory and central banking framework able to identify and react at an early stage to potential threats to financial stability. Conversely, the effectiveness of supervisory action depends also on the existence of appropriate arrangements to support an orderly exit from the market by insolvent institutions.
Indeed, the fact that institutions could exit the market if they are affected severely by a crisis provides a powerful incentive for them to optimise risk management and draw up proper business plans. At the EU level, a key element is the cross-border dimension which  BIS Review 9/2008  1  characterises all three components of the financial stability framework.