If approved by the EU Parliament, the measures would take effect in 2010. A comprehensive rethink of global financial regulation is unfolding in response to the credit crisis, which is enhancing the relative importance of EU and EU member state regulators. The revised framework -- which will take several years to realise -- will rely on improving internal EU regulation, and promoting global regulatory norms, rather than creating new supranational regulatory institutions.

• French President Nicolas Sarkozy has called for a crisis summit to be held on October 4 to include all European G7 members (the United Kingdom, France, Germany, and Italy), the president of the European Central Bank, chairman of the euro-area group, and European Commission representatives.

• However, no major regulatory institutional innovations could be expected at G7 level -- such as an effort to create any supranational banking or capital markets regulator (despite the enthusiasm of some political figures, such as UK Prime Minister Gordon Brown, for regulatory innovations).

Instead, continued incremental regulatory improvements can be expected in public and private arenas. Some of these bring to fruition efforts initiated at earlier phases of the credit crisis. European regulators, firms, and individuals are playing leading roles in many of these discussions.

Cooperation bodies. Several talking shops -- such as the International Organization of Securities Commissions -- continue to weigh in on the crisis. Some facilitate cooperation among national regulators, while others collect private sector expertise. While these have no regulatory authority to implement major changes, they nonetheless play a valuable role in structuring the policy debate -- which feeds back into national regulatory decisions -- or promoting norms, standards, and best practices -- which shapes private firms' operations: • Many of these initiatives seem too slow-paced to be appropriately responsive to current crisis conditions. • Yet their influence should not be swiftly dismissed, because their efforts help create consensus on making overdue regulatory changes -- such as the September 30 Securities and Exchange Commission (SEC) clarification on fair value accounting rules. This allows financial companies greater discretion to depart from mark-to-market accounting in situations where assets are being unloaded in distressed sales. Private sector focus. Market players are not waiting on regulatory innovations to force changes in their behaviours. Instead, they are currently engaged in major internal discussions over policies to understand, manage, shift, and allocate risk:

• Financial institutions. Risk management is moving away from an undue emphasis on observable prices -- this is reflected indirectly in latest SEC fair value guidance -- to a more granular understanding of risk, under which risk managers have to understand underlying assumptions upon which a product is expected to operate. • Lawyers and other advisers. Traditional deal flow has declined drastically. Yet crisis-driven transactions -- such as bankruptcy filings -- continue. The focus in these transactions is on speed of execution. Underlying legal documentation reflects this priority. While lawyers and other advisers are not neglecting to focus on client interests in attempting to allocate and shift risk in the face of virtually unprecedented operating conditions, the speed at which market conditions are changing has left little time for extensive negotiations or thorough and considered reassessment of standard deal terms and documentation. Policy responses to the current credit crisis will be undertaken at national and EU level and will not spawn any supranational regulatory framework. At the same time, private firms, and private and public sector cooperative bodies, will promote private solutions, and new norms, standards, and best practices, for managing and confronting risk.