Professor Niamh Hardiman:

We are learning the lesson the very hard way this time. Many changes have been taking place that are very valuable. Certainly, the restructuring of the pillar banks, the intensification of oversight on the part of the Central Bank, the vigilance and due diligence are immensely more valuable.

My thoughts are partly about formal institutional reform and partly about being attentive to the way institutions work in practice. We thought we had a financial regulation regime but the way it was being implemented was highly influenced by inappropriate expectations about the way the economy worked, based on the idea that markets would be self-regulating and that banks would not take unnecessary or excessive risks on behalf of their depositors, shareholders and so on. These assumptions turned out to be inappropriate. This time, we are correcting the mistakes of last time, but we do not know what the mistakes the next time will be. My point is really that although we are now busy correcting the mistakes that we learned about, we must also try to make sure we have institutions that are themselves adaptive, resilient and capable of policy learning and policy anticipation.