The structuring of CDOs can produce tranches with triple A ratings that are based on a portfolio of loans with a partly inferior rating. These tranches are riskier than traditional bonds with the same rating and generally receive a much higher coupon. The complexity of this kind of securitisation makes risk assessment very difficult.
One could possibly suggest a “PFMI Light” framework that could strike a balance between the need for a safe and sound retail payment system & the requirements of accessible and affordable financial services for the unbanked/under-banked population. Here I would like to briefly flag the following seven issues in the form of what could be called as 7’S Framework.