Given that institutions operate transnationally, there is a need to implement new regulations to level the playing field. Simultaneously, new regulations should be careful not to stifle credit recovery.
If institutions were forced to comply with new regulations at once – for example, in terms of capital – when unable to increase their capital through stock injections or retained earnings, they would have no choice but to liquidate their assets and cut down on loans, which would have an opposite effect on credit expansion.