Focusing on the evolution of the interest rate derivatives market over time, this chart [see slide 13] shows that the US-dollar denominated interest rate derivatives grew the fastest, with the amount outstanding increasing sixfold. The second fastest growing markets were the interest rate derivatives denominated in euro and in pound sterling, which both quadrupled from 1999 to 2006.
Securitisation of illiquid bank assets is a form of financial innovation that has expanded substantially in recent years. This chart [see slide 14] shows the extent of off-balance sheet securitisation via asset-backed and mortgage-backed securities relative to gross domestic product (GDP), using the location of the underlying collateral to link this financial innovation to countries.