What is clear is that private businesses have mis-assessed the risk they faced, tempted by attractively-lower foreign currency interest rates but not sufficiently aware of the need to worry about the variance of the prospective cash flows. An experienced banker might have helped.
I also fear that the potential contribution of market discipline to stability in the derivatives markets is not being fully realized because, in our laudable efforts to improve public disclosure, we too often appear to be mistaking more extensive disclosure for greater transparency. This is an issue to which I shall shortly return.