This Box aims at shedding light on the transmission of EME equity market shocks to global equity returns as well as to 15 individual mature economies’ markets. The share of adjustable rate mortgages (ARMs) in new mortgage credit extended in the US has risen significantly since 2002. Whereas at the end of 2002 the share of ARMs was about 20% in dollar volume terms and just over 10% by number of new mortgages granted, their respective shares peaked at around 50% and 35% in mid-2005, after which they declined somewhat. Of these mortgages, a substantial number were "sub-prime" – i.e. mortgages granted to individuals with poor credit histories. This Box explains why delinquencies on these loans rose significantly after mid-2005, and shows how this ultimately led to spillovers into certain portions of the CRT markets in early 2007. Although global private savings have, at an aggregate level, represented a relatively stable share of world GDP at around 20% over the past quarter of a century or so, there has been considerable variation in savings patterns across countries and regions. In particular, the private savings of developed economies, as a proportion of GDP, have trended slightly downwards from the early 1980s onwards. By contrast, private savings have risen more or less continuously in emerging Asia, with the exception of the years in the immediate aftermath of the financial crisis of 1997-98, while they have been relatively volatile in Latin America. Understanding the drivers of these regional divergences is important in order to ascertain whether the so-called global savings glut could possibly explain the significant widening of global current account imbalances over the past five years. It is also relevant in terms of assessing the extent to which ample savings in emerging economies have possibly contributed to a significant lowering of global long-term real interest rates in recent years. In view of these considerations, this Box examines the empirical drivers of private savings within a large panel of emerging and developed economies over the past quarter of a century. Since the enaction of the Second Banking Directive of 1989, European banks have been permitted to engage in any degree of functional diversification that they consider optimal in terms of risk and return. From a financial stability assessment perspective, it is useful to ask how functional diversification affects risk in the banking system. This Special Feature uses statistical techniques to generate a market-based risk measure, and examines how developments in banks’ income components affect this risk measure during times of extreme equity market movements. The main findings are that size and trading income have a positive effect on the systemic risk measure used, while income from traditional intermediation activities is negatively related to the risk measure used. Identifying the macro-financial factors that drive the default probability of banks’ borrowers and thus the default risk in banks’ loan books is important in order to obtain a better understanding of conjunctural sources of risk in the financial system. This Special Feature presents an original approach for modelling the links between a global macroeconomic model already used at the ECB for modelling international economic and financial linkages and corporate sector expected default frequencies (EDFs) in the euro area. The results show that euro area default probabilities are strongly affected by shocks to GDP, stock prices, exchange rates and oil prices.