crises and to strengthen the resilience of the financial system? " 4. consequences of the financial and debt crisis first and foremost, the stricter financial market regulation is particularly worthy of mention. its fundamental objective was to restore greater validity to the principle of liability in the financial markets. first of all, the root causes of the subprime crisis were tackled. obvious moral hazard in the securitisation business was corrected, for example by introducing a mandatory deductible for securitisation transactions in the eu. in addition, rating agencies are now more closely supervised and are obliged to be more transparent. the more stringent capital requirements under the basel iii framework also mean that the owners, and thus those who are ultimately responsible for taking entrepreneurial decisions, now have to bear greater responsibility for their actions. after all, more money is now at stake for them. at the same time, the institutions have “ greater room to manoeuvre ” in the event of negative developments, and their loss - absorbing capability increases. the average tier 1 capital ratio of the major german banks improved from 5. 4 % in 2011 to 12. 1 % in the middle of last year. the major banks in germany and the other euro - area countries have also been directly supervised by the ecb, in cooperation with national supervisors, since november 2014. the less significant banks - around 3, 500 in the euro area as whole - are supervised by the national supervisors according to uniform standards. this is also an important step on the road to a more stable banking system, especially as national supervisors occasionally tended to see “ their ” banks through rose - coloured glasses. the creation of a single supervisory mechanism ( ssm ) should also be used as a means of counteracting regulatory arbitrage, ie the targeted relocation of business to countries with the least strict supervisory regimes. but the ssm is just one pillar of the european banking union. the other, at least equally as important, pillar is the single resolution mechanism for banks, or srm. this mechanism is designed to facilitate the resolution of a failed bank and ensure that there is a clear hierarchy of liability in place, with the taxpayer as the last possible port of call, in line with the “ bail - in instead of bail - out ” principle. to a certain degree, bail - ins are the implementation of something martin luther had demanded of lenders 497 years ago : “ if you want to have an interest in the gains, you

. the lessons of this crisis were learned and then incorporated into banking law and, although this has since been subject to updates and modernization, it has maintained the hallmark strictness it acquired in this period. some of the recommendations put forward in the light of the recent crisis have, in fact, been part of chilean regulation for some time. for example, it includes : a ) regulatory incentives for banks to maintain capital in excess of the required minimum so that their effective capital represents more than 10 % of their riskweighted assets ; b ) prudential standards to preserve the quality of capital ( hybrid instruments cannot exceed 50 % of basic capital ) ; c ) explicit limit on gross leverage as a complement to capital adequacy rules based on basel recommendations ( basic capital cannot be less than 3 % of total non - weighted assets net of required provisions ) ; d ) special regulatory requirements for larger banks ( capital requirement can reach 14 % ) ; e ) robust provisions regime with a forward - looking approach ; f ) quantitative norms on the match of the terms and currencies of banks ’ assets and liabilities ; g ) preventive capitalization, regularization and resolution systems for banks in difficulties. supervision has also played a key role. in recent decades, this evolved from a formal and passive approach to one that is significantly more intrusive and proactive. supervision now focuses on the governance and, above all, management of institutions. supervisors seek to be familiar with all the aspects or issues that can be important in an institution ’ s behavior, rather than merely verifying compliance with regulation or simply reviewing financial indicators from previous years. the ultimate aim is to induce changes or corrections in the management of an institution when weaknesses are detected. this approach, known in the literature as risk - based supervision, is the one that has been recommended in the light of the recent crisis. on several occasions, supervision has ventured into what is today termed macroprudence. at the end of the 1990s, the sbif issued recommendations urging that due attention be paid to the concentration of risks in the real estate sector, beyond what each institution might have on its books. applying this same logic, it also issued instructions for the treatment of lending to individuals, particularly consumer loans, in the context of the rapid growth of these operations. then, in the early 2000s, it instructed supervised institutions to carefully assess their clients ’ exchange - rate risk, regardless of whether their own positions were well hedged. when mergers and acquisitions intensified a