Improved data collection, such as mentioned earlier, would allow a better view of changes in conditions and potentially contribute to the deployment of countercyclical margins, thereby further decreasing the chances of a dynamic that culminates in adverse fire sales.
Data are not enough: We need theory, too While the steps to improve data taken so far will help, gaps will remain, especially with regard to unregulated or weakly regulated entities. These gaps impede both market participants’ ability to discipline the risks taken by institutions and supervisors’ ability to take prompt action.