A rule that looks on paper to be a good approach to a regulatory concern can sometimes turn out not to be so in practice. Rules will not serve their purpose if they cannot be implemented correctly by firms or monitored and enforced adequately by regulators.
The working group’s focal points are consistent with the insights which we at the Bundesbank have gained so far and have outlined in the Stability Review as an interim assessment of the financial market turbulence. This concerns four key areas: risk management, accounting, ratings and the regulatory framework – and, therefore, in large part, issues of adequate transparency in the financial system.