Cross-border links between banks and nonbank entities have also increased, and there has been a shift of global portfolios toward U.S. securities and cross-border lending into emerging market economies (EMEs), much of which is in U.S. dollars.
Changes in the functioning of financial markets have also affected how the financial system provides liquidity and transmits price changes, and many of the recent changes stem from the increased role of nonbank players. In markets with more standardized products, electronic trading has grown, increasing the use of high-frequency trading and the role of principal trading firms in providing liquidity.