In other words, while the build-up of leverage and the under pricing of credit risk were recognized in advance of the turmoil, their impact was under-appreciated. Further, there was no globally coordinated approach to assess the implications of these systemic risks and policy options to address them. There was also insufficient recognition of the interconnectedness of risks within both regulated and unregulated markets.
Reflecting these lessons of the crisis, the financial regulatory reforms have been underway spearheaded at the international level by the G20, aiming, inter alia, at increasing the resilience of the global financial system. In the process, the international best practice trajectory itself has shifted upwards with the introduction of Basel III and other initiatives. This is what can be called reregulation, the New Normal.