Recent developments in the financial sector, such as increased indebtedness and the burgeoning growth of the shadow banking sector, require new rules as well. There must three primary objectives behind these new rules. First, banks have to become more resilient; in other words, they have to acquire a higher quantity of higher-quality capital to protect themselves against potential losses.
Second, we need effective resolution mechanisms so that, in a worst-case scenario, banks can exit the market without endangering financial stability. Third, we need to ensure that these rules cannot be circumvented by taking business elsewhere, such as, for instance, to the shadow banking sector. The rules of the game have to apply to all alike.