Many people are pinning their hopes and expectations of a stable euro on its independence and steadfastness. The biggest challenge facing the European Central Bank lies in its need to earn the requisite reputation and credibility as quickly as possible. This is in order to justify people’s hopes of a stable euro.
This appears particularly striking when we consider two sources of potentially huge losses: first, extremely one-sided derivatives positions and, second, the high degree of opacity surrounding the interconnectedness of global financial players. In this regard, CCPs will help to better solve another problem I already mentioned: the too-big-to-fail issue. However, CCPs themselves are becoming more systemically important.