Market participants themselves are primarily responsible for making the markets work. Our recommendations are aimed at encouraging a longer-term business policy focus. Specifically, banks must further strengthen their capital base in response to the loss of confidence in the banking sector; and the salaries and bonuses paid by banks have to go down if banks earn less – this applies especially to investment banking.
The second plank of our recommendations addresses market participants’ self-responsibility for the organisation of the markets. This means that even systemically important financial institutions (SIFIs) must be able to exit the market without the financial system collapsing. It is therefore necessary to develop recovery and resolution plans (RRPs) for SIFIs.