The global financial crisis of 2008–2012 exposed major weaknesses in existing prudential regulatory frameworks, sparking urgent calls for comprehensive reform. Chief among the lessons learned was the inadequacy of capital reserves within the banking system, which left many financial institutions ill-prepared to absorb economic shocks. Additionally, the crisis demonstrated that the pursuit of monetary policy goals must extend beyond price stability to encompass broader concerns such as financial system resilience and stability.

While micro-prudential regulation and supervision remain essential for safeguarding individual institutions, the crisis highlighted their limitations in addressing systemic risks. As such, a growing consensus has emerged on the need for stronger, complementary regulatory mechanisms that can provide an additional layer of defense against financial instability. In this context, monetary authorities have increasingly turned to macro-prudential tools, such as minimum capital requirements, to enhance the capacity of banks to withstand external shocks.

This review explores the implications of the global financial crisis for prudential regulatory arrangements, with a particular focus on the need to strengthen capital adequacy standards. It underscores the rationale for requiring banks to hold higher capital buffers as a means of improving their resilience and supporting the overall stability of the financial sector. The paper further argues that sustainable financial system reform must incorporate both micro- and macro-prudential approaches to mitigate systemic vulnerabilities. Strengthened capital regulation is thus not just a regulatory necessity but a strategic imperative in a post-crisis financial landscape increasingly prone to global volatility