So trust needs to be present at every stage in the chain. One breakdown in this chain of trust between counterparties can throw a spanner in the works of the whole process. Ultimately there is only so much due diligence that can be done. Risk is always present in the financial system.
Information asymmetries will always be present between the two parties in a financial transaction. Transparency can reduce but not eliminate the risk from these asymmetries. 4  BIS central bankers’ speeches  Finally, there has historically been trust between regulators and financial institutions. (I am not sure there is all that much of this trust at the moment, as I will discuss later.)