Over the past decades, the financial system has turned into a global village. As a result, a crisis, say, affecting a single bank can quickly spread around the entire globe – as happened in 2008. This is particularly true for monetary unions such as the euro area. Here, problems can spread even faster and may threaten the financial stability of the entire union.
If this happens, it will allow borrowers and agent banks to consider current market prices for loan assets when fixing the terms governing lending in the primary market. A positive growth cycle in secondary markets can be envisioned with more institutional investors entering the credit market. Of course, expansion of syndicated loan market alone does not complete the reform of corporate financing in Japan.