On the other hand, the wellmanaged closure of unprofitable banks is necessary, so that they do not distort the market for the viable banks. Another challenge is to improve banking practices and banking culture. Reform of banking regulation is part of this change. Apart from stricter capital requirements, the new regulatory framework will also gradually develop stricter standards for bank liquidity.
The risks of making long-term commitments with excessively volatile funding have been amply revealed during the recent crisis. I regard improved regulation as an absolute necessity after the experiences of the last four years. At the same time, we must acknowledge that regulation alone is not enough.