For all the regulatory changes that are in place, in process, or under consideration, however, I believe that capital regulation remains the single most important element of prudential financial regulation. Let me immediately elaborate upon that statement in two ways. First, capital regulation itself must be multi-dimensional and rigorous in each of its components.
Second, while strong capital regulation is necessary for a sound financial system, it is not, on its own, sufficient. In my remarks this afternoon, I will concentrate on the first of these points and discuss how capital regulation reform is evolving in the wake of the crisis.