tailieunhanh - THE EURO AREA FINANCIAL SYSTEM: STRUCTURE, INTEGRATION AND POLICY INITIATIVES

However, instead of appropriately distributing risks, this process often concentrated risk in opaque and complex ways. Innovations occurred too rapidly for many financial institutions’ risk management systems; for the market infrastructure, which consists of payment, clearing and settlement systems; and for the nation’s financial supervisors. Securitization, by breaking down the traditional relationship between borrowers and lenders, created conflicts of interest that market discipline failed to correct. Loan originators failed to require sufficient documentation of income and ability to pay. Securitizers failed to set high standards for the loans they were willing to buy, encouraging underwriting standards. | EUROPEAN CENTRAL BANK WORKING PAPER SERIES WORKING PAPER NO. 230 THE EURO AREA FINANCIAL SYSTEM STRUCTURE INTEGRATION AND POLICY INITIATIVES BY PHILIPP HARTMANN ANGELA MADDALONI AND SIMONE MANGANELLI May 2003 EUROPEAN CENTRAL BANK WORKING PAPER SERIES WORKING PAPER NO. 230 THE EURO AREA FINANCIAL SYSTEM STRUCTURE INTEGRATION AND POLICY INITIATIVES1 BY PHILIPP HARTMANN2 ANGELA MADDALONI2 AND SIMONE MANGANELLI2 May 2003 1 We appreciated Marco Pagano s comments on an outline of this paper and also early comments by Vitor Gaspar. Research assistance by Anna Maria Agresti Sandrine Corvoisier and Fabio Moneta is gratefully acknowledged. We thank participants to the Oxford Review of Economic Policy editorial meeting at the European University Institute in Florence in particular Christopher Allsopp Mike Artis the editors and our discussant Eric Fisher. The points made by an anonymous referee helped us to improve the paper. The opinions expressed herein are those of the author s and do not necessarily represent those of the European Central Bank or the Eurosystem. This paper can be downloaded without charge from http . int or from the Social Science Research Network electronic library at http abstract_id xxxxxx 2 European Central Bank. E-mail . European Central Bank 2003 Address Kaiserstrasse 29 D-603II Frankfurt am Main Germany Postal address Postfach 16 03 19 D-60066 Frankfurt am Main Germany Telephone Internet Fax Telex 49 69 1344 0 http 49 69 1344 6000 411 144 ecb d All rights reserved by the author s. Reproduction for educational and non-commercial purposes is permitted provided that the source is acknowledged. The views expressed in this paper do not necessarily reflect those of the European Central Bank. ISSN 1561-0810 print ISSN 1725-2806 online