Currently, the ECB is clearly the principal calming influence in the financial markets, with the € billion of bond purchases that we recently approved, plus the € billion we approved shortly before that, plus the € billion we were already doing.
This decade-long account is the latest chapter in a much older story, whose moral is clear: in regulating cross-border finance, expectations matter. When capital and liquidity requirements are imposed only at the level of the consolidated institution, they create a good deal of flexibility, but they cannot reassure host supervisors that sufficient resources will truly be available in a time of need.