Allied to the increasing importance of transactions in securities markets, for example to source funds for bank lending and the growth of a shadow banking sector, this served to increase the vulnerability of the financial system to systemic risk.
The United States is a conspicuous example of this, of course. Another example is Ireland, which conducted an excellent economic policy except for one thing – its policymakers did not apply adequate supervision to their banking system and, among other things, the effect of the real-estate market on it.