This is precisely why there is an increasing demand for transparency about both the degree of risk of individual instruments and the exposures of institutions to different instruments, markets and counterparties. The EU-wide stress test exercise proved to be an important step toward a more transparent assessment of the exposures of individual institutions to different instruments and countries.
The  2  The impact assessments carried out by the Basel Committee and the Financial Stability Board with relation to the transitory and long-term effects of the Basel reform package revealed that the costs of financial intermediation may temporarily rise during the implementation phase (e.g. in terms of increasing spreads, lower credit volumes and a more moderate GDP growth).