During the euro crisis, quite a few instances of ineffective supervision came to light. Why did that happen? Evolution theory tells us: Because it was possible. One simple conclusion from the financial as well as the Euro crisis was that rules will be effectively enacted and followed only if they are “dynamically stable rules”.
Or, if I may translate this into bankers’ English: People will abide by their good intentions or by the formal rules only if we can make it so that it is in their best interests to do so. This already makes the political design of rules and institutions a difficult task.