Products are likely to come with a broader range of standard expected performance statistics. BIS Review 93/2008  11  •  Third, as already recommended by the Financial Stability Forum and the CGFS 8 , rating agencies will supply additional information on the risk characteristics of rated securities and the sensitivity and uncertainty attached to their ratings. But there will also be increased recognition of the limitations and costs of any monitoring function for highly complex products. That, too, will support greater standardisation and transparency. •  Fourth, and relatedly, end-investors will demand more explicit rules governing acceptable collateral for securitisation and greater due diligence and risk sharing by originators and issuers. For example, strict definitions of prime/Alt-A/sub-prime mortgages will be required based on FICO scores, loan-to-value ratios and other characteristics. And originators will be required to report their exposure to the securities they issue. Contracts, for example, may require issuers to declare and maintain a significant stake in securitisations to align their incentives to screen and monitor loans. •  Fifth, investment banks will continue to offer tailored products to match specific risks. But there will be much greater recognition of the illiquidity and hence cost of the bespoke component. Equilibrium liquidity premia will be higher. That is likely to lower demand for such products, perhaps substantially. •  Sixth, banks and other financial institutions will provide more information on exposures as pressures to improve market disclosure and transparency continue. And already regulators are assembling best practice accounting disclosures which should become standard reporting.

Speed of resolution is paramount in these procedures so as to minimise the losses in asset value that would materialise if they were to drag on, especially in a context in which the economic policy response in the short term means that the liabilities of ailing businesses to general government will foreseeably be much higher than in previous crisis periods. The introduction of more appropriate procedures and incentives would also avoid suboptimal levels of business liquidations and destruction of the productive system that would weaken the longterm economic growth and recovery potential. The impact on the financial situation of households As in the case of firms, after the last global financial crisis, the financial situation of households improved significantly, and mortgage lending standards were far more prudent. However, consumer lending has posted high growth rates in recent years and groups of vulnerable households have continued to exist. In any case, this crisis is also having a significant impact on households. It has led to a reduction in the wage income of individuals who have lost their jobs or been furloughed, and in their wealth, given the adjustment to the valuation of most financial assets. Thus, social security registrations, after stripping out workers subject to furlough schemes, that is, the series which might be called “actual registrations”, is estimated to have shown a year-on-year decline of 22% at end-April, with much sharper reductions in some of the services segments hardest hit by the restrictions on movement associated with the state of alert, such as the hospitality sector.