The greater ramification of the financial market is likely to reduce the probability of a single intermediary’s difficulties spreading to the rest of the system. Nonetheless, the number and size of today’s financial markets and institutions mean that it may prove more difficult to limit the effects of a crisis where one does occur.
Despite the progress made in adjusting the regulatory framework to the new reality of financial markets, supervisory authorities are faced with new challenges; the most important concerns the coordination of their action, both domestically and internationally. The crises that have occurred in the last few years show how fast tensions can be transmitted across countries, markets and intermediaries.