But we should certainly try to understand what went wrong and how we can avoid such episodes in the future. One problem was that lenders had unrealistic expectations about the extent to which their loans to emerging markets would be protected.
It is therefore important that cross-border lending be assessed on a stand-alone basis, and that supervisors make sure that the pricing and management of such exposures are not undertaken on a false basis. In other words, a tightening-up of credit risk procedures is called for.