International Monetary Fund. Monetary and Capital Markets Department
INTERNATIONAL MONETARY FUND
The events of the past six months have demonstrated the fragility of the global financial system and raised fundamental questions about the effectiveness of the response by private and public sector institutions. The report assesses the vulnerabilities that the system is facing and offers tentative conclusions and policy lessons. The report reflects information available up to March 21, 2008.
This chapter focuses on two aspects of structured finance that have contributed fundamentally to the duration and depth of the crisis, namely, the valuation and disclosure of structured finance products. It concludes that the complexity of these products, coupled with weak disclosure, left the system exposed to a funding and confidence crisis. Looking forward, it is likely that structured finance will recover, but that the products will likely be more standardized and transparent to both investors and regulators.
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