Beyond the short-term need to maintain the effective intermediation function of the financial system, the crisis has highlighted substantial structural weaknesses in many areas of this system. This is where we need to rebuild and strengthen our defences. This effort should be focused on three goals: it should foster sustainability, it should strengthen resilience and it should be holistic in its reach. 1.
The first goal is a financial system that is sustainable in the long term. This means correcting some of the incentives that have led to excessive short-termism. It is now clear that the promise of significant returns in the short term was often linked to a misjudgement of underlying risk.