And let me add that transparency requirements are doubly-effective because it is investors who are tasked to perform the due diligence on ABSs and verify that lenders comply with risk retention requirements. So we see that the worry about underlying asset quality is likely to be confined to a number of increasingly-verifiable cases.
1  2  ABSs in this speech denote both ABSs and RMBSs. BIS central bankers’ speeches  The second source of ABS risk is at the level of the structure itself. It is true that ABSs are complex instruments, involving many parties to a transaction and a range of possible constructions.