This is not the first international banking crisis the world has seen. The previous ones occurred without credit default swaps, special investment vehicles, or even credit ratings. If crises keep repeating themselves, it seems reasonable to argue that policy-makers need to carefully consider what they are doing and not just ‘double-up’ by superficially reacting to the specific features of today’s crisis. While we cannot hope to prevent them, we can perhaps make crises fewer and milder, by adopting and implementing better regulation—in particular, more macro-prudential regulation.

The author is Chairman of Intelligence Capital Limited, Member of the UN Commission of Experts on Financial Reform and Emeritus Professor of Gresham College in London.