for Financial and Enterprise Affairs. This article is a revised version of a paper discussed at the October 2010 meeting of the OECD Committee on Financial Markets (CMF), taking into account these discussions as well as written comments received subsequently. All remaining errors are those of the author. This work is published on the responsibility of the Secretary-General of the OECD. I. Background As the market upheavals of the past few years confirm anew, the business of financial intermediation entails risk. Intermediaries exist to manage and transform credit, interest rate, maturity, and various other types of financial risks. Inevitably, some institutions will err in the process. A common goal of public policy in regard to finance is to ensure that such errors are not commonplace, and that the consequences are appropriately contained and do not spill over to innocent third parties or to the broader economy. Financial crises are a critique of the success of the regulator
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