Second, I would like to briefly discuss the shifts in financial markets with respect to market liquidity. I will argue that, whereas some of the factors affecting market liquidity are temporary, others – such as the regulatory environment and innovations in trading – are here to stay. Finally I will conclude by presenting my view on the outlook for monetary policy implementation. 2.
Current drivers of financial markets The financial crisis of 2008 and the subsequent European debt crisis dealt financial markets a serious blow. Investors had to reconsider long-held beliefs that were accepted as truths: that large banks were immune to bankruptcy, and that sovereigns in the developed world would never default on their debt.