Minsky has therefore tendered a guiding principle for discussion: if regulators develop new rules, they have to ensure that the build-up of a bubble through excessive credit growth is less likely than it would be in a wholly unregulated financial market with an inclination towards exaggeration.
However, since no regulation, however forward-looking it might be, can completely prevent crises altogether, banks have to be crisis-proofed. As I said, Minsky’s theory has been around for over 20 years. Yet guiding principles – as we all know – do not automatically translate into optimal regulation. Real regulatory initiatives need a little more actual content.