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While it is true that the originate-to-distribute model has contributed to the current financial turmoil, it would be wrong to discredit the model itself, Malcolm Knight, General Manager of the BIS said.
The differences in performance across firms suggest that it is not the originate-to-distribute model itself that is problematic. What needs to be done is to strengthen the underpinnings of the originate-to-distribute model, in particular by enhancing the information available to market participants, incentives structures, risk management practices and the use of credit ratings.
Both public authorities and private market participants have to work together on these issues so as to make the originate-to-distribute model more resilient and thereby more able to contribute to efficient and sound financial markets.