The consequent large pool of short-term funds makes the movements of interest rates and stock prices extremely volatile, while financial institutions may become illiquid because of the short-term nature of their liabilities and the long-term nature of their assets. Admittedly, financial market unrest is unavoidable in the process of restructuring.
The arrangements with these third-party agencies should be very clear, specific and well-defined. In outsourcing of critical functions, including technology services, if an incident occurs, the banks cannot shift the blame to the third parties because the primary responsibility of ensuring operational resilience is on the banks and not on the third parties.