Examples are the term mismatches and leverage of individual financial intermediaries, and the imperfect information about risk exposure and soundness of particular banks and assets. Imperfect information and the interconnectedness of the different agents can transform individual vulnerabilities into systemic weakness. It is possible that a difficulty occurring in one component of the system could be extended to other elements.
For example, economic agents interact with each other and an asset in one institution may be a liability in another, giving rise to interdependence and to a counterparty risk. Financial institutions, such as banks, usually carry out analogous transactions that could also lead to similar risk exposures.