2  BIS Review 151/2009  products. If these risks are deemed significant then one cannot make a contract, out of fear. In particular, since financial transactions are large in amount and complex in contents, financial transactions will not be carried out in the usual manner if financial institutions are extremely sensitive to the risks.
If financial transactions cease, funds necessary for economic activity will not be distributed and economic activity will stagnate further. As such, in the current global financial and economic crisis, confidence, which is the most important element in finance, collapsed during the process of the unwinding of the "excesses." Consequently, the flow of funds stopped and the economy deteriorated further, aggravating the crisis. III.