Financial crisis can serve as a powerful stimulant to the evolution of market mechanisms, and I expect that the aftermath of the present turmoil will see both innovation and incremental refinement to quality assurance in credit markets and in counterparty credit risk management. I would like to highlight two themes that I believe will influence this process.
First, for quality assurance to be effective, some of the products traded in financial markets have to become simpler and more transparent. Product complexity and a lack of transparency are at the root of many of the problems that have emerged, especially in the markets for securitizations and structured credit products.