In addition regulation had not kept up with the internationalization of transactions and with the increasing complexity in financial markets, nor was there clarity about which financial markets should be regulated and which, if any, should be self regulatory.
Some tenets of sustainable regulatory systems In a rapidly changing financial environment, it is clear that regulatory systems must be dynamic and flexible bur must still avoid loopholes where financial institutions can circumvent regulation and benefit from regulatory arbitrage. At the same time regulation must not stifle innovation. The challenge will be therefore to develop systems that are flexible and comprehensive without being onerous.