Moreover, the unexpectedly rapid resonance of financial turmoil through global markets signals a need for further study of the complex cross-country linkages among lenders and borrowers, and the ways in which those linkages are influenced by such factors as leverage, interdependent counterparty relationships, and backup liquidity agreements.
What is the Principles’ formula for success and why is it that commitment to, and compliance with, the Principles is advancing? I believe that the answers to these questions lie in the Principles’ design features. The Principles are not a heavy-handed mandatory approach, but a soft mode of governance: they incorporate strictly voluntary, market-based, and flexible guidelines which are applied on a case-by-case basis.