Before moving on to my second theme, let me add a few footnotes concerning financial market infrastructures. One is the tradeoff that arises from the increasing use of centralized clearing. Centralized clearing has unambiguous advantages – for example, the mitigation of counterparty risk, better collateral management, increasing transparency, and enhanced market liquidity through standardization.
These positive effects should augment the robustness and resiliency of market infrastructure. That is why the G20 has aimed for its wider adoption in view of the lessons of the Great Financial Crisis. At the same time, centralized clearing has its own issues. It may increase, if not properly designed, moral hazard among market participants, who will be less concerned with counterparty risk.