Only a sufficiently transparent rating process that represents negative incentive effects for rating agencies will enable the investors to make informed judgements about the product characteristics as well as the quality of the rating process itself. It should be mentioned in this context that initiatives led by IOSCO, the international organisation of securities supervisors, point in the right direction.
The very channels that in good times enhance resilience may also propagate, and possibly amplify, shocks. Interdependence thus requires more international coordination of policies for liquidity provision, regulation and supervision of markets and intermediaries. This would help to impede opportunities for regulatory arbitrage and the situations of moral hazard. 4.