Ample market liquidity had its origins in benign macroeconomic conditions, low and relatively stable long-term interest rates, financial  1  Indeed, central banks had been discussing the possibility of a repricing of risk for some time. See "Developments and Trends," Financial System Review (Ottawa: Bank of Canada, June 2004): 4-5.
BIS Review 30/2008  1  innovation, and the broadening list of financial market participants. Ultimately sowing the seeds of its own demise, market liquidity fed a supreme confidence in the ability to sell holdings at prices that matched mark-to-model valuations. This overconfidence encouraged the rapid growth of the "originate-to-distribute" credit model.