Namely, that complex regulation with multiple safety nets – such as the risk-weighted approaches and the debt ratio – are a good alternative to simple rules. At this juncture, Schimanski would probably conclude that while the supervisor’s attack was perhaps a little heavy-handed, it wasn’t deadly.
This makes banks more resilient to potential economic downturns or major unexpected events. And supervision has changed quite dramatically, too. Many supervisors have been given greater powers to act pre-emptively; the set of supervisory tools and resources has expanded considerably. Supervisors are therefore able to pick up on deficiencies in banks, risky trends and misbehaviour earlier and more decisively than before the crisis.