Market participants' and investors' concerns about the creditworthiness of their trading partners, or counterparty risk, intensified, and as a result the volume of market transactions dropped sharply and market liquidity dried up.
For example, there has been a continued substantial accumulation of foreign exchange reserves by several countries of Asia reflecting increasing trade and financial integration of the region with rest of the world. Today, Asia holds foreign exchange reserves of $ 3 trillion, which is 62 per cent of total foreign exchange reserves of the world.