  Third, the pro-cyclicality of the financial system needs to be mitigated by improving both the quality and quantity of bank capital and by ensuring that banks create enough prudential liquidity buffers in good times to have reliable shock-absorbers on which to depend, if and when bad times come.
  Fourth, there is a need for a macro-prudential approach to financial supervision that takes into account not only the links between financial behaviour, economic activity and macroeconomic policies (e.g. the crisis triggered a freefall in economic activity that called for policy relaxation, the exit from which could postpone economic recovery), but also the interconnectedness between financial institutions, markets and cross-border activity.