Let me just mention few key areas where reforms are needed. First, with respect to banks, the turmoil has highlighted that some risk categories have been underestimated, especially liquidity risks relating to banks’ commitments to structured investment vehicles and conduits. Second, market players seem to have relied excessively on ratings of complex assets.
This has been the case in part due to the wide distribution of risks through the financial sector which made the assessment of the value of the underlying asset difficult for the investor.