These differences can affect the way small countries choose to implement global standards. When there’s symmetry between financial market practices, small country regulators usually seek to align practices to global standards, so as to minimise the cost for banking groups operating across jurisdictions. When symmetries aren’t apparent, regulators in small economies seek to use the flexibility in global standards to adapt to local conditions.
The canonical case is that of maturity transformation by a very conventional bank, which takes demand deposits and uses the funds to make loans that are repaid only over time. Should an unusual number of depositors want to withdraw their funds, for whatever reason, the bank may not have sufficient cash on hand to meet those demands.