Concluding this assessment of some of the underlying causes and the likely consequences of the financial market turmoil, I want to stress the following: The recent market liquidity squeeze originated from a surge in default rates by a subset of borrowers with particularly weak credit histories and economic fundamentals. In other market segments and economic sectors, the fundamentals are broadly strong.
In order to contain financial market volatility, it is crucial, at the current juncture, that unanticipated shocks and investor concerns do not lead to unwarranted contagion to markets and sectors where the fundamentals are sound. 4  BIS Review 109/2007  III.