The  4  BIS Review 49/2007  new instruments are also changing the distribution of risk. When entities in the emerging markets borrowed in foreign currencies, they bore the exchange rate risk while lenders bore default risk. This arrangement made the financial crises of the 1990s very costly: Sharp currency depreciations caused the domestic-currency value of foreign-currency debt to balloon.
I also hope to be able to answer some questions and clear up misunderstandings – regarding, for example, which tasks European banking supervision, the SSM, does perform and does not perform in supervising small and medium-sized institutions, as well as those tasks it does not wish to perform. Let me start by clearing up one misunderstanding.