Two directions in which we probably have to go in order to make progress are to generally integrate more realistic characterisations of financial systems in macroeconomic models and to capture the relevant nonlinearities that are so typical for the unfolding of financial crises. 9.
Fourth and last, we need to make further progress in the regulation of systemic risk, as opposed to only regulating individual risks. To be fair, Basel III goes some way in this direction. It generally increases the quantity and quality of capital and liquidity buffers. And the conservation of capital against excessive distributions will be complemented with a counter-cyclical element.