FX mismatch risks – banks typically assume that currencies are fungible given the depth of liquidity in the spot FX and FX swap markets, particularly in reserve currencies. However, a bank may not be able to access FX markets as normal in times of stress. 9 : Financial Crises in Advanced Economies Flashcards ... Dynamics of financial crises in advanced economies Stage three : Debt deflation If the economic downturn leads to a decline in price level (deflation), the real values of liabilities (debts) increase, but the value of assets does not increase, which leads to a decline in net worth.