Ultimately, it is the regulation of financial markets that matters when it comes to creating a more resilient financial system. Basically, making the financial system more stable is a manageable task. The real challenge is to make it more stable without significantly hurting economic productivity. Remuneration schemes, currently a hot topic among the public, are a good example.
The disincentive effects of bonuses in terms of short-termism and excessive risk-taking might be prevented by imposing statutory caps on salaries or limiting tax deductibility. However, if interventions are too far-reaching, they may have other disincentive and adverse effects. Therefore it is important to find the right balance.