Prudential Regulation & Supervision

c. 1700 BC

The Code of Hammurabi set out standards for lending and the regulation of interest

The Babylonian legal code contained provisions governing loans and the charging of interest. It represents one of the earliest recorded attempts by a state to impose rules on financial dealings, an ancient ancestor of prudential regulation.

1610 · 416 years ago

Dutch authorities enacted the first recorded ban on short selling

The Dutch prohibited short selling, the earliest recorded regulation of the practice. The Dutch were pioneers of financial regulation in the early modern period, establishing precedents for state intervention in market conduct.

1873 · 153 years ago

Walter Bagehot articulated the lender-of-last-resort doctrine

In Lombard Street, Bagehot set out the principle that a central bank should lend freely against good collateral at a penalty rate during a crisis, a doctrine that still underpins how supervisors and central banks respond to bank runs.

1933 · 93 years ago

The United States created federal deposit insurance

The Banking Act separated commercial from investment banking and established the Federal Deposit Insurance Corporation, ending recurring bank runs and creating a model of depositor protection that dozens of other countries later adopted.

1949 · 77 years ago

India passed the Banking Regulation Act

The act gave the Reserve Bank of India formal statutory powers to license, inspect and supervise commercial banks, establishing the legal foundation for prudential oversight of the country's banking system.

1984 · 42 years ago

US regulators rescued Continental Illinois rather than let it fail

The bailout of Continental Illinois National Bank was the first explicit case of a bank judged too big to fail, a moment that reshaped how supervisors weighed systemic risk against market discipline for decades afterward.

1989 · 37 years ago

The US savings and loan crisis forced an overhaul of thrift supervision

Widespread failures among savings and loan institutions, driven by weak capital and lax lending standards, led to sweeping reform legislation and the creation of new agencies dedicated to resolving failed lenders and tightening prudential standards.

1995 · 31 years ago

The collapse of Barings Bank exposed the danger of unsupervised trading

A single derivatives trader's unsupervised losses bankrupted Britain's oldest merchant bank within weeks, prompting a global overhaul of internal risk controls and closer prudential supervision of complex trading activities at banks worldwide.

1998 · 28 years ago

Japan consolidated supervision into a single new agency

The Financial Supervisory Agency took over bank, securities and insurance oversight after the 1990s banking crisis exposed fragmented and forbearing supervision that had let failing lenders keep operating for years without intervention.

1999 · 27 years ago

South Korea unified banking, securities and insurance supervision

The Financial Supervisory Service was created after the Asian financial crisis exposed fragmented, overlapping oversight of banks and non-bank lenders, consolidating prudential supervision into a single agency answerable for the whole financial system.

2003 · 23 years ago

China separated bank supervision from its central bank

The new China Banking Regulatory Commission took over day-to-day supervision of commercial banks from the People's Bank of China, part of a broader move to build specialised, arm's-length prudential oversight as the banking system opened to markets.

August 2026 · this month

Sri Lanka tightened monetary policy through the first half of 2026

The Central Bank of Sri Lanka said it had tightened its policy stance during the first half of the year to safeguard price stability while continuing to monitor risks to the wider financial system.

August 2026 · this month

Nigeria moved to strengthen its depositor safety net

A parliamentary committee and the Nigeria Deposit Insurance Corporation reviewed deposit insurance coverage following the completion of a sector-wide bank recapitalisation exercise that raised minimum capital thresholds across the industry.

• Nigeria's banking sector had just completed a recapitalisation exercise

August 2026 · this month

Ghana's banks raced to cut bad loans ahead of new sanctions

Regulators moved to penalise lenders that failed to bring down non-performing loan ratios, pushing banks to intensify recovery efforts and tighten credit standards to avoid the threatened enforcement action.

August 2026 · this month

India proposed new prudential norms on bank capital adequacy

The Reserve Bank of India set out a new leverage ratio, tighter exposure reporting and Basel-aligned capital adequacy requirements for commercial banks, part of a broader tightening of supervisory standards across the country's banking system.

• The RBI also tightened reporting for non-bank lenders

July 2026 · last month

UBS rebuked Swiss regulators over proposed capital rules

The bank disputed a Swiss central bank report suggesting it already held sufficient capital to meet draft legislation that would require it to fully back its foreign units, a rule proposed after the collapse of Credit Suisse.

July 2026 · last month

The Central Bank of The Bahamas found financial stability risks remained well contained

The bank's Financial Stability Report, covering data through December 2025, concluded that risks to the banking system stayed manageable, with capital and liquidity buffers holding up despite external pressures on the wider Caribbean region.

July 2026 · last month

Southern African Development Community banks stayed well-capitalised despite mounting pressures

Regional banking systems across the bloc remained sound despite global economic headwinds, though central banks continued to flag risks from currency volatility and slower growth among key trading partners.

June 2026 · 2 months ago

The Federal Reserve found major US banks resilient in its 2026 stress tests

The annual exercise showed the largest banks could absorb hypothetical losses from a severe recession while continuing to lend, though analysts cautioned the results did not necessarily justify further loosening of capital requirements.

• Analysts flagged emerging risks beyond the test scenarios

June 2026 · 2 months ago

India was told its banks' bad loans would stay below 2% through 2028

A Reserve Bank of India report projected the banking system's combined gross bad-loan ratio would remain under 2% for three years under its baseline scenario, even as lenders navigated a more challenging global environment.

May 2026 · 3 months ago

The International Monetary Fund assessed Greece's financial system for the first time since 2006

The Financial Sector Assessment Program found risks to financial stability were low before the outbreak of war in the Middle East and remained manageable afterwards, though the fund flagged the need for continued vigilance.

2010 · 16 years ago

The United States created a formal bank stress-testing regime

In response to the 2008 crisis, the Dodd-Frank Act established annual stress tests and a resolution authority for failing systemically important institutions, setting a template for macroprudential supervision later copied by other jurisdictions.