So, future work should concentrate on how to make the rating process clearer and more explicit and to preserve and strengthen its integrity. A second, alternative view, on the collapse and confidence and liquidity would point at the inadequation of capital to risk in the new securitized model. Ultimately, the ability of an investor to carry risk is determined by her capital base. Capital must be sufficient to absorb the potential losses if risk materializes. If not, confidence may vanish and liquidity may disappear. To quote Stephen Cecchetti 1 , "in the context of financial intermediaries, capital plays the role of collateral". So, for the securitized model to work, there cannot be too big a disconnect between the allocation of risk and capital in the system. This is true both at the aggregate level and for each individual issuer of securities. At the aggregate level, insufficient capital leads to excess leverage and, as a consequence, to excess fragility. For each individual issuer of securities, carrying risks with little (or no) capital increases the probability of a liquidity crisis. It may be that, as time goes by and we look more closely at what happened, this second view will gain in importance. I would note that cracks occurred in those places – the conduits and especially the SIVs – where there was no capital available to absorb shocks.
But, as I said, now is the time to analyze and think. BIS Review 128/2007  3