The four key institutional frameworks for regulation of the financial sector internationally – Institutional Approach (entity-based regulation), Functional Approach (activity-based regulation), Integrated Approach (universal regulator model) and Twin Peaks Approach (separation of prudential regulation and conduct of business regulation) – all attempt to address the above objectives through different formal structures.
But if banks do not set aside any capital for government bonds, a sovereign default can hit the banking sector head on, potentially triggering a financial crisis. 4  A new home for monetary union  As we can see, the home shared by the member states of the euro area needs renovating in more ways than one.