What regulation changes are required after financial crisis?

In my opinion greater flexibility for central banks to provide liquidity and also to focus greater attention on credit and asset booms is needed. The breakdown of markets has highlighted the need for a better understanding of the monetary policy transmission mechanism, including whether central banks should support liquidity in term markets.For central banks in many emerging market countries, facing capital outflows and exchange rate pressures, the provision of additional liquidity can be more complex as it may fuel a drain of foreign exchange reserves.

The current crisis underlines the need for better crisis responses. Actions taken by national authorities have at times appeared piece-meal and uncoordinated both within countries and internationally, which has risked undermining confidence, weakening the impact of policy responses, and distorting markets.

A clear exit strategy to allow the authorities to withdraw market support and a transition to a new and more stable financial market structure will require careful planning and international cooperation in order to avoid market distortions and to promote a revival of markets at a reasonable level of systemic risk. More work on the approach to this is required by Ministries of Finance, central banks, and regulators.

Many have blamed the Economists and some have gone ahead and suggested the end of freemarket capitalism. But if one look at the phenomenon of the turmoil one clearly can see the mixing up of "socialistic" interference in freemarket prior to the begining of the turmoil. Eagltarianism meaning equality for all played it's role too deeply. Adam Smith suggested "if one trucks goods and services and create exchanges then a market forms by itself". Regarding the turmoil this time the regulators allowed this phenomenon to be tampered, they started giving away homes to those who couldn't afford it or create the proper exchanges which is a tampering of the market. They added "teaser rates", "equity kicker" etc; to induce sale rather than leave it alone for markets to operate efficiently. When this tampering became too heavy for markets to handle it failed and the markets erupted.

So the lesson we learn is never tamper with markets, by artificialy interfering with whatever be the "political will", let it correct and manage itself.