One way to control such adverse incentives is to insure sufficient capitalization of financial institutions, so that their owners have sufficient ‘skin in the game’. In this regard, regulators have done much after the Global Financial Crisis. But supervisors need to stay constantly alert. Cyber security Second, there is the issue of cyber security. The European financial system is highly interconnected and interdependent.
This constantly keeps the potential for financial contagion at the center of financial stability considerations. But the highly interconnected network of institutions also implies that cyber-attacks may pose an increasingly serious concern to the Eurosystem’s financial stability. The issue with cyber-attacks is further accentuated due to its dynamic, constantly evolving nature and because cyber-attacks are borderless.