(1) Regulation should be broadened to include all activities that pose economy–wide risks. (2) Financial regulation will have to focus on strengthening financial institutions’ management of liquidity and risks. (3) Conflicts of interest should be reduced by making bonuses more consistent with long-term success than with short-term profits. (4) The transparency of the financial system should be improved.
In the area of financial supervision, the focus should be on detecting developments in the financial sector that might lead to a systemic crisis. An important lesson of the last international financial crisis is that international cooperation and policy coordination are crucial to maintain financial stability. Hence, these issues are currently being addressed on a global and regional level.