2  See W. Roeger, J. Varga and J. in’t Veld, 2008, “Structural reforms in the EU: a simulation-based analysis using the QUEST model with endogenous growth”, European Commission Economic Papers, No 351; and T. Bayoumi, D. Laxton, P. Pesenti, 2004, “Benefits and spillovers of greater competition in Europe: a macroeconomic assessment”, European Central Bank Working Paper No 341.
BIS Review 101/2010  3  3. The third challenge is posed by the lack of transparency and regulation in financial markets. In many respects, the recent crisis can be seen as the direct result of vulnerabilities and imbalances in the financial system. The risks stemming from financial innovations were compounded by insufficient risk management and adverse incentives.