In the ten years between mid-1996 and mid2006, house prices in the US almost tripled, growing on average at an annual rate of 11%. 6 An important development during the house price boom was the deterioration of lending standards, which can be traced back to the “originate-to-distribute” financial intermediation model. Originate-to-distribute (as opposed to originate-to-hold) is a process whereby new loans are not held by the bank, but bundled, sliced, repackaged, and sold to investors. While the incentives in the originate-to-hold process favour the origination of good loans which can be expected to be serviced and paid back, the incentives in the originate-to-distribute process favour the origination of as many loans as possible, in order to profit from the fees involved in the underwriting and securitisation process. It is thus not surprising that credit standards decreased during the boom. After house prices had peaked in 2006, it became more and more obvious to some market participants that many sub-prime borrowers would soon be unable to service their debt. Prices of sub-prime-backed securities started easing in 2007. As 2007 progressed, the deteriorating sub-prime market began affecting the confidence in related structured finance products and, in August 2007, led to a general repricing of risk and the deterioration of liquidity in many market segments, not least in the money market. As banks became more concerned about their own liquidity and more cautious about counterparty risk, they became less willing to lend, especially on the unsecured money market, at maturities longer than a few days.

These actions include the signing of a memorandum of understanding that further facilitates information sharing related to the Treasury market, and again co-hosting this conference. Going forward, the staff of the Joint Member Agencies will continue to work together on effective and comprehensive data collection, monitoring of market activity and liquidity through the Interagency Working Group, development of principles and best practices for Treasury market data transparency, and the regulatory framework for government securities. A main focus of recent work by the Joint Member Agencies has been to improve the availability of information to both the official sector and the public. Given this emphasis, it is worth spending a few moments discussing the benefits of obtaining timely and robust data on Treasury market transactions. Data are essential to understanding flash events and market liquidity. Attendees at this 1/3  BIS central bankers' speeches  conference are very familiar with the events of October 15, 2014, when the 10-year Treasury yield experienced a 37-basis-point trading range over the session. At that time, market participants struggled to identify what had caused that sharp movement. Similarly, a flash event occurred in the British pound just this month. The pound depreciated nearly 6 percent, and then largely retraced this move within several minutes, seemingly without a major catalyst. Once the domain of equity markets, flash events have happened with increasing frequency, also occurring in the dollar-yen and euro-dollar currency pairs in recent years. Treasury and foreign exchange markets share a number of common attributes.