Developments of recent days tend to confirm this hypothesis. Conflicts of interest emerge not only with respect to crisis prevention but also crisis resolution. Authorities have an incentive to push the burden of adjustment, in case of a crisis, towards other institutions, either domestic or foreign.
Recent experience has shown that conflicts of interest hamper the necessary transmission of information on critical institutions from the supervisory authority to the central bank, even within the same country, in the hope that weak institutions would be bailed out by liquidity injections rather than by addressing the solvency problem.