In turn, the existence of an effective legal and regulatory framework for the financial sector and the conduct of financial supervision in accordance with international best practices plays an important role in promoting financial stability. To this end, considerable efforts have already been made to strengthen the legal and regulatory frameworks of the financial sector in SEE countries and to improve supervisory practice.
The result was a broadscale financial collapse, which then fed over to the real sector and caused bankruptcies, credit restraints, and recessions. These real income losses in turn magnified the financial problems. Solutions Are there any solutions to this mess? Many are calling for an end to open capital markets, as if the benefits are not worth the costs.