And with this goes our reliance on the financial system’s incentive to credibly regulate itself, unless we can find other mitigants of moral hazard that are immune to systemic implications. Finally, we as regulators have to take a closer look at ourselves, with a view to eliminating everything that contributes to our segmented perception of events in the financial system.
Response to the crisis A financial crisis – an event in which the financial system fails at its core tasks, including allocating savings, financing investment, pricing assets, and transferring risk – poses difficult challenges to policy in terms of assessment and the calibration of responses. These tasks are difficult at the domestic level, and still more complex at the global level.