Is the financial system any safer now than in 2008? There’s been some progress but less than you might think. I argued last week that regulators should put in place much tougher bank capital requirements than planned, for instance, and step up efforts to segregate different kinds of financial business to suppress contagion.

Measures such as this, however, don’t directly confront the biggest gap in the emerging regulatory system: the treatment of wholesale short-term lending. This is where the meltdown of 2008 started, and probably where the next such catastrophe will begin.

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