The global financial crisis has taken a heavy toll, both in terms of lost output and the erosion of financial wealth at a personal, national and international level. Four years on, the regulators continue to ponder how best to aid the recovery of the battered financial system and avoid a recurrence of any such financial catastrophes in the future.
No wonder we have seen a slew of regulatory responses aimed at addressing the vulnerabilities of financial markets and institutions. For instance, the Basel Committee has endeavoured to improve the quality and transparency of banks’ capital bases, introduced a minimum global standard for funding liquidity, and proposed a leverage ratio.
