And equally, improved transparency and market disciplines on their own will not be sufficient. The answer lies in striking a sensible balance among a number of mutually supportive policies. That balance will almost certainly vary from country to country. Hence, we should not seek to pursue a “once size fits all” type of approach.
The problem stemming from the rise in housing mortgage loan delinquencies has crossed the Atlantic to the European markets through a decline in the credit ratings of securitized products such as asset-backed commercial paper (ABCP) with mortgage loans as collateral. With uncertainty regarding the location and the scale of risks, the functioning of credit markets including securitized markets has deteriorated overall.