As we all know, many important reforms, both related to the tools at the IMF's disposal as well as the IMF's governance structure, are now at a critical juncture and compromises are needed to make progress. Another issue is the need for strengthened supervision of cross-border financial institutions.
Substantial market risk may be associated with holdings of illiquid instruments; again, tranches of bespoke CDOs illustrate this well. A pattern of crowded trades may lead to market illiquidity – sometimes in surprising locations – when risk aversion heightens.