The Impact of Lax Financial Regulation on the Euro Crisis

A loose financial regulatory framework that was especially susceptible to outside shocks was the root cause of the euro crisis. Despite the establishment of supranational regulators by the European Union following the crisis, institutions encountered issues with overlapping regulatory functions and limited authority. Poor regulation, which ultimately caused the financial system to collapse due to the influx of risk money, is exemplified by the Irish financial crisis. With the implementation of an embedded regulatory system, the creation of a single regulatory mechanism, and other actions to improve the stability of the financial system, the EU has now advanced in the field of financial regulation. To collaboratively create a more resilient and effective financial system in the future, however, it will be essential to improve international collaboration and make clear the roles and responsibilities of regulators.