Krzysztof Rybiński: Innovations in the financial markets – globalization of the infrastructure Panel presentation by Mr Krzysztof Rybiński, Deputy President of the National Bank of Poland, at the conference “Innovations in the financial markets 2007”, Warsaw, 16 October 2007. *  *  *  Ladies and Gentlemen, Since I have little time to deliver this presentation, I will skip the introduction and the anecdote and get straight to the point. The global financial markets have recently reported episodes of strong volatility; liquidity was suddenly lost, some markets failed to perform their functions in an adequate manner, others ceased to operate altogether. The liquidity and solvency of some financial institutions were put at risk, whereas some investors suffered loss. Disturbances originated from underestimation of risk by a number of agents on financial markets, ranging from subprime lenders to institutions which purchased structured credit facilities offered by banks and their vehicles. A thorough review must be performed with a view to examining the role of rating agencies and supervisory authorities, which appear to have underestimated the risk generated by the rapidly expanding market of asset-backed instruments and the market of credit derivatives. It is not yet certain whether the worst stage of disruptions is over. In the light of the above, strong asset appreciation, especially visible on the emerging markets, should be assessed with caution.
2/2003, Summer 2003. Tsatsaronis K., Systemic financial risk and macroprudential supervision, article presented at Bocconi University Centennial Conference on risk and stability of financial system: what roles for regulators, management and market discipline, 2003. 6  2  Rybiński K., Globalizacja w trzech odsłonach, Difin, Warszawa 2007. BIS Review 134/2007  market. The currently effective legislation may contribute both to aggravating the supplydemand imbalance which supports the divergence of stock prices from the fundamentally reasonable levels and also towards the growth in the scale and impetus of price adjustments, should a bubble burst. Open pension funds are one of the main sources of demand on the stock market. From their very beginning, they have recorded average monthly inflows of PLN 870 million, the value of equities in their portfolio have exceeded PLN 51.5 billion, whereas their share in free float has amounted to ca. 22%. The assets held by open pension funds are likely to continue their rising path. As estimated, their credit debit balance will stabilize to report a balanced position only in 2031 7 . In addition, the past quarters saw high demand of investment funds for equities. Meanwhile, despite a large number of debuts, the value of equities introduced to the Warsaw Stock Exchange is relatively low. By way of illustration, in 2004, the value of public offers amounted to PLN 13.2 billion (including PLN 7.9 billion of PKO BP's issue); in 2006 it was PLN 4.2 billion, whereas in the first nine months of 2007 it was PLN 6.4 billion.