In the United States, around 70% of shocks are mitigated and shared across the individual states through integrated financial markets, whereas in the euro area the share is only 25%.34 It is therefore also in the interest of the weaker countries in the euro area to complete banking union and to proceed with the construction of a genuine capital market.
Liquidity risk management Recent developments suggest that market participants must thoroughly reassess the marketliquidity assumptions that underlie their existing risk-management practices. The scope and duration of disruptions to market liquidity that we have experienced since last summer have greatly exceeded what market participants, prudential supervisors, and central banks thought likely or even possible. The implications are quite broad and significant.