Some change is clearly desirable, given that a number of risks were previously underpriced. But if past experience is any guide, as prices change and the demand for collateral increases, financial institutions will seek to manage their collateral more efficiently and this is likely to increase interconnections in the financial system.
The report also noted that the greater collateralisation is likely to increase the procyclicality of the financial system and to increase uncertainty about the strength of the claim that unsecured creditors have over the assets of a financial institution. So there are clearly tensions. Reducing counterparty risk is an appropriate objective.