Financial Regulation International
"Fit and Proper" as a prudential governance tool
From binary compliance to early intervention in European banking supervision
By Michele Trifiletti
The global financial crisis of 2007-2009 marked a decisive turning point in the conceptual foundations of banking supervision.
Prior to the crisis, the prudential framework at both international and European level was predominantly built around quantitative
metrics: capital adequacy ratios, concentration limits, liquidity requirements and, more generally, indicators designed to
measure solvency and resilience in a standardised and comparable manner.
1 The underlying assumption was that compliance with these numerical thresholds constituted a sufficient condition for ensuring
the stability of individual institutions and, by extension, of the financial system as a whole.
2