First, the root of the problems for many financial institutions affected by the market distress was their inability to adequately assess the risks associated with the exposures they held, either directly in their books, or indirectly, via off-balance sheet entities.
In this respect, I welcome the request of ECOFIN to ESCB and CESR to finalise their recommendations. (this will also facilitate harmonisation and avoid regulatory arbitrages that can lead to the “race to the bottom”). Second, the current financial crisis is showing how fast problems in one market can spread over to other markets.