In response, regulators, and financial institutions themselves, have sought to reduce the probability of a repeat of the crisis and to rebuild trust in finance. On both accounts, there is still some way to go.
If we look through all the detail of the various regulatory initiatives – and there is certainly a tremendous amount of detail – many of the specific measures stem from the desire to address risks that arise when the financial system undertakes maturity transformation – that is, when it transforms illiquid longer-term assets into liquid assets.