The experience over many years is that some of these forces are certain to wane when the credit cycle is in full upswing. In the good times, self-discipline can falter under the weight of competitive pressures, as can market discipline. Hopefully in those circumstances, the regulatory framework will continue to impart the necessary restraint. Today, I’m going to focus on the Basel III reforms.
Other reforms, such as those around central clearing and OTC derivatives are also having a significant impact on the way many of you do business, but I will leave them for another time. The Basel III measures will strengthen the requirements for financial institutions’ liquidity and capital.