I want to bring out that they are, nevertheless, integral to financial stability authorities. Under each of those headings, I shall raise a few points that have not featured prominently in recent debates. To be clear, I shall not attempt to cover all important markets. And I shall not address important questions about the role of securities regulators in crisis management, circuit-breakers, or counter-cyclical policies such as varying minimum margin requirements as conditions change. Moreover, I must stress that I speak only for myself. The issuance and distribution of securities Toxic ABS and CDOs – cash as well as “synthetic” or derivative versions – were at the centre of the crisis. They were not toxic for the financial system because they were risky or, indeed, because many underlying household and business borrowers became overindebted. Markets can price (and ration) risk they comprehend (if appropriate requiring yields that inhibit issuance). They were toxic because they were mispriced; and they were mispriced in part because they were misunderstood. Through the consequent enticements to leverage, that misunderstanding engulfed banks, asset managers, credit insurers and, eventually, the authorities. Both dealer-financing markets and end-user markets closed. BIS central bankers’ speeches  3  Listing authorities and securities regulation And yet all of those securities were issued and/or distributed under the securities laws and policies of developed countries or financial centres with elaborate securities market regulation. Prospectuses or other documentation had to meet regulatory or listing requirements.
When the P27 initiative was announced, the BRO project was put on hold in order to consider whether a future common Nordic infrastructure as proposed by the P27 banks could be a satisfactory replacement. Norges Bank has engaged in joint discussions with the other Nordic central banks since P27 was launched. The central banks have given preliminary feedback on the P27 project and appreciate the project’s ambition to improve payment system efficiency in the Nordic area. At the same time, there are issues that need to be addressed before the authorities can take a position on any transition from domestic infrastructures to a common Nordic solution. This process may take time and will also involve authorities other than the central banks. Security legislation is one of these issues. If P27 is realised, it will probably be viewed as an important critical infrastructure for the countries involved. National security concerns may influence the conditions governing whether a payment system infrastructure can be operated across national borders. In the case of Norway, one likely condition could be that satisfactory contingency arrangements must be in place in Norway. Domestic control of the payment system must be possible in a crisis. The European Central Bank has launched a European solution for real-time payment settlement in central bank money called Target Instant Payment Settlement, or TIPS. The system is scheduled to commence operations this month and may be expanded to include non-euro area countries.