Hi, would anyone here share with me the historical context of monitoring basis risks? My understanding is that cross-currency basis risk were monitored since Day 1, but tenor basis risks (e.g. LIBOR3M/6M, FF/LIBOR...) were not actively monitored (as spreads were small) until the 2008 financial crisis struck and blew these spreads out of historical proportion.Now, any IR desk will surely be monitoring/hedging all of the basis risks between the major indexes, even they have returned back to historically low levels.Is my understanding correct?Thanks.

Correct...

As Martinghoul says you've got the main thrust right, but there are a couple of things to add:1) Quite a few people were monitoring tenor basis risks before the blowout. But there were very many who weren't... in the less sophisticated places, the temptation was for a trader to put on something along the lines of a "pay EUR6M/rec EUR3M+0.25bp" swap: in a shop that didn't monitor basis risks properly this would potentially show as a riskless 0.25bp profit rather than the cheaply sold liquidity option that it actually was. The people who were monitoring tenor basis risks would be the ones on the other side of the trade, who did well when things blew out.2) Spreads and volatilities haven't returned to the pre-2008 levels, although they are obviously way lower than they were. But there is still clearly more movement, and a more consistent and clear spread structure across the OIS/xM levels, than there was pre-2008.3) In some currencies, OIS spreads at the short/medium end are artificially narrow because they are squished by the (increasingly soft) zero bound on absolute levels. One might expect short end OIS/3M spreads to increase when/if rate levels pick up.