8 Taking an extreme scenario, if all investors were to attempt to take the same position at the same time, then the homogeneity of their behaviour would cause liquidity to evaporate. Assuming these three conditions are fulfilled, the possibility of trading risks separately will result in their better allocation, making the financial system more resilient.
Reforms and policy directions In the pursuit of these objectives, we will carry on with our work in the following areas: reinforce asset cleanup through asset disposition under the amended SPV Law; improve the risk management process through effective enforcement of risk-based supervision; promote better governance and market discipline; and establish an appropriate capital adequacy framework for banks.