They should also establish a new Self-Regulatory Organisation to monitor all aspects of the industry (including the establishment of the new common nomenclature), to maintain a dialogue between the industry and all authorities responsible for the management of systemic risk, to promote innovation in risk modelling and policy and, to ensure that effective competition is maintained, to keep the publ [...] The rethink should include a greater differentiation between individual and systemic risks, recognition of the impact of the ups and downs of the economic cycle, the dangers of homogenous behaviour, and need for a balance between risk absorbers or risk traders. [...] And via Basel 2, it is a significant characteristic of the Capital Requirements Directive(1), and of several of the regulatory initiatives now being taken by the IMF and the World Bank, and the Financial Stability Forum. [...] In the case of Northern Rock the bank run was not a cause of Northern Rock’s difficulties, but a result of the crisis and of the preliminary response of the authorities. [...] The most important reaction to the recurring crises that have followed the process of liberalisation since the 1970s has been the development of international regulatory standards and procedures.
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