But it is important to identify clearly why a regulation is deemed necessary and, accordingly, how it should be targeted. In the framework I have set forth, for example, institution-specific measures may be thought of as those needed to protect financial stability even though a firm is already subject to business model regulation.
While discretionary fiscal measures can help bolster aggregate demand and limit the impact of the financial crisis on the real economy, the room for such measures is subject to a number of important limitations. •  First, the use of fiscal policies will need to take account of the sustainability of public finances.