There were also no liquidity requirements, nor any limits to concentration risk. In some cases, such as in Italy, the effects of those gaps were mitigated by stricter supervisory practices and approaches. For example, we placed more stringent limits than elsewhere on the capital savings that could be achieved through the application of internal models.
Experience has given us no reason to regret those choices. While a full analysis of all the direct and indirect causes of the crisis is complex and certainly beyond the scope of this speech, it is a fact that the sparks that ignited the crisis appeared in places where the supervisory ‘touch’ had, in the end, become too ‘light’.