Cross-border financial linkages and financial stability Cross-border financial linkages can have important implications for financial stability when large institutions react in a similar manner and herding behaviour causes financing flows to amplify financial market shocks. We have seen this desperate search for yield across borders many times before with investors taking on more and more risk and in doing so significantly lowering risk premia.
The opportunities that are offered by digital technology can be a driving force to achieve this goal. One important topic of the Finance Track under the German G20 presidency is the digitization of the financial sector. The quantity, quality, and diffusion of technological innovations are at the heart of productivity growth.