On the one hand, credit risk transfer, in principle, leads to a more efficient allocation of risks. On the other, credit risks do not disappear in the process and are often shifted into unregulated market segments. As transactions take place over the counter, there is no publicly available information on where the risks go. Transparency suffers.
It is imperative that we have close collaboration between key stakeholders working to regulate the domestic financial sector, so that there is a comprehensive understanding of the opportunities and challenges of such developments, as such collaboration and synergies are crucial to addressing any concerns or challenges, as soon as they arise.