We would not want to crowd out the other valuable aspects of international regulatory cooperation, including sharing supervisory perspectives on internationally active financial institutions and analyzing latent risks to financial stability.
In addition, the sharp declines in asset prices result in losses, possibly inducing a shortage in capital, and the deterioration in market liquidity, thereby provoking a further shortage in funding liquidity due to margin calls and lowered collateral values. Those developments eventually hit banks’ balance sheets. 2  BIS Review 82/2009  Second, there exists an asymmetry between the upward and downward phases.