Chapter 2 provides the necessary context to the analysis that is conducted in the book. It first recalls the history of the negotiations of the GATS Annex on Financial Services and the role played by prudential concerns at that time. Then, the Chapter examines the economic rationales for prudential regulation and gives account of the evolution of prudential concerns at the national and international level since the entry into force of the GATS. In particular, the Chapter looks at regulatory developments that have taken place in national jurisdictions in the aftermath of financial disruptions and provides an overview of the work done by international standard-setting forums. The Chapter gives also account of the most common prudential measures adopted by domestic legislative authorities.