Recent years have seen a financial system that
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has outgrown in size,
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lost track of its core functions,
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and became a major source of risk itself.
Overall, the financial sector has veered from its genuine role of servicing the real economy. The current process of overhauling financial system regulation is an important factor to help the financial sector become safer and thus eventually to contribute to sustainable economic growth.
It is now important not to lose momentum and to follow strictly the schedules for implementation. At the same time, the adequacy of the regulatory system needs to be assessed on a regular basis. This helps avoiding the mistake of the past where regulators failed to spot new sources of risk arising in the financial sector.
The guiding principle on all regulatory measures and any re-dimensioning of the financial sector must be: finance has to regain its core role of servicing the real economy without becoming a source of risk itself.
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© BIS - Bank for International Settlements
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