The recognition that market failures as well as regulatory and supervisory deficiencies are at the root of the crisis has prompted the relevant public and private fora to make significant efforts to identify weaknesses in the international financial sector and develop measures to restore its smooth functioning.
In the case of Europe, there is increasing concern that the current prudential framework based on national regulatory and supervisory regimes cannot address the many challenges arising from the activities of large, complex and highly interdependent financial institutions operating across borders.