Most of these initiatives can be grouped into three major categories:   Actions to significantly reduce the probability of failure of large systemically important financial institutions.   Measures to broaden the oversight of the financial system to include activities that occur outside of the core banking system. The shadow banking system, which is composed of the wide range of financial intermediation activities that occur outside  2  BIS central bankers’ speeches  of the traditional purview of bank regulators, needs greater attention. In particular, shadow banking activities that involve maturity transformation are vulnerable to shocks because such activities do not have the support of bank deposit guarantees or access to central bank liquidity and, thus, are vulnerable to funding runs.   Steps to strengthen the resolution regime and the core financial market infrastructure to ensure that when a large complex financial firm fails, the failure doesn’t threaten to bring down the entire financial system. Turning to the first set of initiatives designed to reduce the probability of failure of large, systemically important financial institutions (SIFIs), the tougher capital and liquidity regimes that the Basel Committee has devised are probably the most important elements. On the capital side, Basel III significantly increases requirements with respect to both the quantity and quality of capital. On the quantity side, there have been two important changes.
To conclude, the main challenges ahead are twofold. First, a "wise" exit from the macroeconomic policy stimulus in order to strike a right balance between the need to support economies and prevent accumulation of imbalances. Second, shifting the focus back to structural and transformational policies to address deep seated pre–crisis structural bottlenecks, as well as new structural hurdles that will be left as a legacy of the pandemics, which might not be even well known at the current juncture. This is the only way forward towards transformation of the traditional economies into more smarter, inclusive and greener economies. Finally, when written in Chinese, the word 'crisis' is composed of two characters. One represents danger and the other represents opportunity. I hope that, we have left the danger behind us, and now we will use the opportunities to elevate the wellbeing of our economies. 1 IMF WEO, April 2021. 2 Global Competitiveness Report, 2019. 3 https://www.worldbank.org/en/publication/global-economic-prospects  3/3  BIS - Central bankers' speeches