The role of private pension funds in financial markets Let me now turn to the role of pension funds in the financial system and their interactions with and implications for monetary policy: From a monetary policy viewpoint, given the interactions between financial market developments and monetary policy decision-making it is important to monitor and understand the factors driving the structures of the financial system.
Furthermore, a well-functioning, liquid and deep financial market is essential for central banks as it better ensures that high quality information about economic fundamentals can be extracted from financial market prices. Owing to the fact that pension funds are stable long-term investors with sophisticated investment strategies implies that they potentially play an important role in the shaping of the financial market.