IMF has published its views on why the financial crisis happened and the weaknesses in the financial regulatory system that meant risks were not spotted. It urges:
- extension of the regulatory perimeter to catch all activities that pose economy-wide risks;
- strengthening market discipline, including relying less on credit ratings to meet prudential requirements;
- minimising procyclicality in regulation and accounting;
- filling information gaps; and
- stronger systemic liquidity provision frameworks within central banks.