The global financial crisis of 2008-2012 exposed significant inadequacies in existing prudential regulatory frameworks, prompting calls for reform initiatives. A key lesson learned from the crisis was the banking system's inadequate capital reserves. Moreover, past financial crises underscored that monetary policy objectives extend beyond price stability alone. Robust micro-prudential regulation and supervision, while essential, are insufficient safeguards against risks to financial sector stability. These lessons necessitate the development of initiatives by monetary authorities to enhance the resilience of the financial sector. This review examines the implications of the global financial crisis on prudential regulatory arrangements, emphasizing the importance of stronger regulatory mechanisms to complement existing guidelines and mitigate systemic risks to financial stability.
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