Nevertheless, the markets have apparently failed to heed our warnings sufficiently, in this crisis as in past episodes. To many of us, last year’s crisis did not come as a surprise.
In June 2007, in a speech at the Central Bank of Argentina, I myself expressed concern that the risk of a broader shock, resulting from a widespread decline in the appetite for risk, had increased. I warned that if the initial price movements were to trigger counterparty concerns, this might easily generate deeper and more broad-based liquidity erosions, posing systemic risks.