Moreover, issuance of structured products that embed leverage, which were originated in large volumes prior to the crisis, has not resumed on any significant scale. More broadly, the appetite of most market participants for additional leverage appears to remain generally muted, with most investors not fully using their existing funding capacity.
Therefore, the risk of a rapid and disorderly deleveraging in the event of a swift change in market sentiment seems to be limited at this point. Nonetheless, two dynamics with respect to the use of leverage bear watching.