Migration of this activity could be either a net positive or a net negative for financial stability, depending on whether it actually transfers risk irrevocably from the core of the financial system, and whether the institutions to which activity migrates rely on funding that is stable and robust to fire sale dynamics.
Conclusion To wrap up, I believe that sustaining financial stability requires supervisors to consider financial markets, in addition to financial institutions and infrastructure. That is most obviously so when conditions threaten the safety and soundness of the financial system through leverage, liquidity transformation, or deterioration of credit underwriting or other riskmanagement standards.