ex ante may not be so easy. supervisors adopt a risk - based approach to apportion resources to the various tasks and intermediaries ( i. e., they increase resources where they see higher risks ), but the exercise is a probabilistic one, which can be defied by reality. some problems can be detected too late, or not at all. second, even when the problem is detected at an early stage, it can be difficult for the supervisor to adopt successful remedial actions if the bank is not responsive. typically, see federal deposit insurance corporation, fdic ’ s supervision of signature bank, 28 april 2023 ; fdic ’ s supervision of first republic bank, 8 september 2023 ; board of governors of the federal reserve system, review of the federal reserve ’ s supervision and regulation of silicon valley bank, 28 april 2023 ; government accountability office, bank regulation : preliminary review of agency actions related to march 2023 bank failures ( gao - 23 - 106736 ), 28 april 2023 ; basel committee on bank supervision, report on the 2023 banking turmoil, october 2023 ; report of the expert group on banking stability, the need for reform after the demise of credit suisse, 1 september 2023 ; swiss national bank, financial stability report, 2023 ; p. hernandez de cos, reflections on the 2023 banking turmoil, 14 september 2023. this includes but is not limited to : the composition of the board and the extent to which its members have relevant experience, including banking and financial expertise ; the board ’ s ability to effectively challenge the bank ’ s management, oversee the bank ’ s risk profile and steer its strategy ; the independence and empowerment of the risk management and internal audit functions ; adequate safeguards to identify and eventually mitigate possible conflicts of interest, the enterprise - wide risk culture, including how embedded it is in corporate and business processes ; and the incentives provided by senior management compensation schemes. see board of governors of the federal reserve system, cit. ; report of the expert group on banking stability, cit. supervisors adopt more and more intrusive measures in a proportionate fashion, gradually increasing pressure as the situation deteriorates. in principle, stark decisions should be taken well before a bank breaches regulatory requirements and reaches the point of non - viability. in its report on the recent crises, the government accountability office argues that us regulators had been recommended years before to add noncapital

, who might be unable to fully appreciate the underlying risk ; accepting to deleverage. unless carefully calibrated, widespread extension of resolution can therefore jeopardize the traditional business models of smaller banks and the biodiversity of the banking system. see deposit insurance corporation of japan, annual report 2021 / 2022, august 2022. see report of the expert group on banking stability, cit, p. 18. for example, even stricter limits to precautionary recapitalization are envisioned ( introduction of a quantitative limit, strict time limits for the transfer of the state ownership, with the risk of an automatic declaration of foltf ). on the other hand, while until recently the prevailing interpretation was that interventions of dgs different from deposit pay out were state aid, this is no longer the case. this interpretation hampered the management of some banking crisis by the italian dgs, and was challenged by the italian authorities. a sentence of the european court of justice ( the so - called “ tercas ” sentence ) explained that alternative interventions by the italian dgs do not represent state aid. this opened the way to synergies in the operation of supervision, resolution and dgs in the future. the framework consists of a european authority ( the single resolution board ) and of national resolution authorities. it involves the european commission and, in the event of use of harmonized financial resources, of the european council. moreover, in case of intermediaries with subsidiaries outside the euro area, the involvement of the respective national authorities is contemplated. 5. conclusions the banks and the whole financial system have proven to be more resilient to the march 2023 banking turmoil, compared to the past, thanks to the wide - ranging reforms and enhanced controls implemented after the great financial crisis. the impact on the economy has been probably milder than it could have been. however, the crisis reminded supervisors and regulators about the need to remain alert and to ensure that international prudential standards are quickly implemented and continuously updated. the basel committee and the financial stability board are assessing whether the regulatory framework to preserve financial stability may need some changes. regulation and supervisory practices on liquidity risk are among those requiring attention. concerning crisis management, the strengthening of the available toolkit and institutional structure in the last years has been relevant. however, bank crisis management remains a challenging task. the recent events clearly show that the concept of systemic bank may change over time depending on several factors ( technology, habits ),