BIS Review 62/1998  -5-  It is particularly worth noting at the present moment that imprudent behaviour and excessive risk-taking by financial institutions often follow periods of declining profits due either to deregulation, and the associated loss of monopoly rents, or bad investment decisions in the past.
Examples of such phenomena can be found in the domestic behaviour of US banks in the 1980s14 and the expansion of Asian loans by certain Japanese and European banks more recently.15 Given the strong current trend towards financial deregulation in emerging markets, and the likely effects of similar developments in industrial countries (the “Big Bang” in Japan, the effective demise of Glass-Steagall in the United States and the effects on European banks of the introduction of the euro16), regulatory oversight will continue to have an important role to play for the foreseeable future.