In most instances the impact of any crisis would differ across jurisdictions, depending on the stance of the relevant authorities on regulation and oversight, that is, whether regulators adopt more of an intrusive approach or take an arms length approach. Depending on the approach taken, the market participant’s risk management practices will be different and therefore the impact will differ accordingly.
A coordinated approach by regulators is thus imperative to ensure that the swing does not move to over-regulation, based on the experience of only one, thereby having detrimental effects or even introducing systemic risk in other jurisdictions.