In the early 2000s many believed in the self-regulation of the financial market – so restricting the entrepreneurial freedom of financial market participants was not at the top of governments’ to-do lists. This all changed with the financial crisis, which was costly for banks, their investors and the taxpayers in many countries. In addition, the crisis was followed by an economic recession.
Banks, for example, now have to comply with a strict set of rules – they have to hold more and better capital than they did ten years ago. Their capacity to absorb losses has increased significantly. Banks are better prepared for a potential drying-up of liquidity sources, as the quantitative and qualitative requirements regarding liquidity management have risen significantly.