The objective of this paper is to draw lessons from recent banking sector crises especially with respect to the design of an optimum “regulatory regime.” Just as the causes of banking crises are multidimensional, so the principles of an effective regulatory regime also need to incorporate a wider range of issues than externally imposed rules on bank behavior. This suggests that strategies to avoid future crises also need to be multidimensional, involving macro policy, the conduct of regulation and supervision, the creation of appropriate incentive structures, the development of market discipline, and the internal governance and management of financial institutions.