Money market mutual funds, futures contracts, junk bonds, and asset-backed securities are all examples of this process at work. 1  Ross Levine and Sara Zervos, “Stock Markets, Banks, and Economic Growth,” American Economic Review, vol. 88 (June 1998), pp. 537-558.
BIS Review 101/1999  4  Once capital markets and traded instruments came into existence, they offered banks new options for hedging their idiosyncratic risks and shifted their business from holding to originating loans. Bank trading, in turn, helped these markets to grow. The technology-driven innovations of recent years have facilitated the expansion of this process to a global scale.