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A fundamental conclusion drawn from the recent financial crisis is that the supervision and regulation of financial firms in isolation - a purely micro prudential perspective - are not sufficient to maintain financial stability. Rather, a macro prudential perspective, which evaluates and responds to the financial system as a whole, seems necessary, and the ongoing discussions of regulatory reform in the United States underscore this view. The recently concluded Supervisory Capital Assessment Program (SCAP), better known as the bank "Stress test," is one example of how the macro- and micro prudential perspectives can be joined to create a stronger supervisory framework that addresses a wider range of supervisory objectives.
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