2/4  BIS central bankers' speeches  In addition to clearing, the extended use of electronic platforms also contributes to the resilience of the European repo market. As mentioned in the last ICMA survey, the segment of the electronic repo trading (via bilateral trading) in particular has benefited from the turmoil observed during H1 2020 because of the dash for cash situation. Nonetheless, support that voice-brokers can punctually bring to clients has been also an important factor during these difficult times. 2. Some points of attention going forward The resilience of the sovereign debt markets during the crisis and their contribution to the absorption of the economic and financial shocks we had to face, should not hide however a few attention point that their development has contributed to intensify or bring back to the forefront, from a financial stability perspective. I would like to highlight two of them, margin calls and the sovereign-bank-corporate nexus. a) European sovereign debt is of course used as collateral to obtain liquidity on the repo market. Episodes of volatility in times of crisis, like during the March 2020 market turmoil, or idiosyncratic events, such as the Gamestop or Archegos ones, can result in significantly increased cash needs, in particular stemming from margin calls across centrally cleared and non-centrally cleared markets. The resilience of the repo market, meaning its liquidity and depth, is thus critical in responding to those margin calls, including for the non-bank financial sector.
BIS Review 49/2009  3  as well as to the commercial and residential property sectors. Moreover, financial markets – despite recent positive developments in equity markets worldwide – remain vulnerable to swings in investor confidence and risk aversion, which could adversely affect liquidity and asset prices in some markets. Against the background of these very difficult conditions, significant policy measures have been taken by central banks and governments in Europe to improve market liquidity and replenish capital buffers. Governments created schemes for guaranteeing new bank debt, injected capital and, more recently, provided asset relief. These measures were successful in preventing a meltdown of financial systems and they helped to bolster confidence. The Eurosystem provided important input into the design of these measures, in the form of recommendations aimed at ensuring that such measures would help to safeguard financial stability and restore the provision of credit to the private sector, while at the same time maintaining a level playing-field within the Single Market to the maximum extent possible, and also containing their impact on public finances. It is still early to accurately assess the impact of these government measures on the longerterm funding and the recapitalisation of banks as well as their effectiveness in fostering bank lending to the private sector. This is because the evidence is relatively limited, as the implementation of the measures has been gradual over the past few months.