In contrast, when most loans are securitized and originators have little financial or reputational capital at risk, the danger exists that the originators of loans will be less diligent. In securitization markets, therefore, monitoring the originators and ensuring that they have incentives to make good loans is critical.
•  Second, emerging markets and advanced economies are now much more integrated than they used to be in the 1990s. The share of emerging markets in global trade and GDP has increased strongly. In addition, despite the build-up of domestic-currency bond markets, there is still considerable dependence on foreign funding as a large share of local currency bonds is held by foreign investors.