We are already increasing our capability to deliver effective prudential supervision, as the IMF FSAP and Trowbridge report on CBL Insurance suggested we should. This means more skilled people on the ground. It also means building the right analytical frameworks, taking a more sceptical view, and being more willing to act.
The Global Financial Crises (GFC) has aptly demonstrated the havoc that can be caused when profit taking motive combines with lack of transparency and disclosure standards, inadequate awareness of sophisticated financial products, optimistic expectations about asset pricing and lax regulatory standards.