The likely pro-cyclicality of the regulatory standards needs moderation. Work is well under way on those fronts. Most importantly, the global policymaking community will have to grapple more effectively with the problem of entities that are ‘too big to fail’, but potentially ‘too big to save’, especially where their activities cross national borders.
This is probably the most taxing financial regulatory problem of our time. For their part, banks will need to reduce their reliance on the extended guarantees and stand on their own feet before too much longer.