Yesterday, Alistair Darling, the U.K. Chancellor of the Exchequer, stated that while there is "growing evidence that the steps taken, at home and internationally, are stabilising the banking system and supporting our economies, … there is much further to go." Mr. Darling stated that "too many people simply failed to understand the impact of globalisation and innovation in financial markets" and he outlined several lessons to be learned from the financial crisis of the last 18 months:

  1. Transparency is Paramount - There has been "unprecedented change" in the financial sector over the past two decades which created "flawed" risk models and "dangers" that banks and regulators "failed to fully understand." To promote greater transparency, "accounting standards have to be improved," and it is important to "achieve a single and high-quality set of global standards."
  2. International Solutions - Different countries are "more interdependent than ever before" and their fortunes link across borders. Regulators cannot "only look at their own backyard and hope to understand what’s happening." The proposed Financial Stability Board, to be established by the G20, will be essential to "spot risks and provide early warning of financial imbalances."
  3. Preventing Failure - "[W]elcom[ing]" yesterday's proposals set forth by the Obama Administration, Mr. Darling advocated "stronger global standards" which will "mean a stronger system in the future," so that governments are "ready in case it happens" again. In particular, the size of banks should "[n]ot become an open invitation for reckless behaviour" by such banks which might otherwise feel "safe in the knowledge that their governments will be forced to intervene."
  4. Approaching Regulation - Regulation should move away from the focus on individual firms, and "[r]egulators and central banks need to work together and look more carefully at the system as a whole," in order to understand how built up risk and exposure can "threaten stability."