‘There’s a growing recognition the dispersion of credit risk by banks to a broader and more diverse group of investors … has helped make the banking system more resilient”. So said the International Monetary Fund’s Global Stability Report in 2006.
“Improved resilience may be seen in fewer bank failures,” the IMF predicted. “Consequently, the commercial banks may be less vulnerable today to credit or economic shocks”.
“Obviously, if the unwinding of the various imbalances were to signal lower-than-expected growth, markets would react more sharply; but there is little evidence from the above analysis to suggest that the expected or likely market corrections in the period ahead would lead to crises of systemic proportions.”
Zhu Min, a man worth listening to
Global Financial System Resilience in the Face of Cyclical Challenges
The Influence of Credit Derivative and Structured Credit Markets on Financial Stability