Finally, a reduced supply of government bonds could have important implications for collateral markets, in which they currently play a key role. Wider use of non-government securities as collateral could have the result that a flight to quality in a crisis might leave lenders exposed to credit risk, or borrowers to liquidity risk as they try to meet margin calls. Larger haircuts can address this risk in part. More generally, wider use of exposure netting through well-managed and prudently designed central counterparties may be desirable in future. Conclusion I think it is too early to judge how material these issues will become or whether private sector solutions could emerge. Bringing together my themes, however, it is clear that credit risk management will become an even more important issue for the securities markets. Your challenge will be to understand and manage these risks prudently and profitably. Our challenge, at the Bank of England, will be to follow market developments closely as part of our financial stability role. BIS Review 15/2001  5
Governor Subbarao has been a staunch advocate of RBI’s pro-active role in addressing financial inclusion to help those underserved. As the world’s second most populous country, India has faced an uphill task to expand financial inclusion, especially to individuals in remote areas. But the numbers speak for themselves: in 2011, just 35 percent of adults have bank accounts according to the World Bank’s Global Findex Report. By 2017 that number has dramatically risen to 80 percent. In his keynote address this morning Governor Subbarao will share with us India’s remarkable experience on improving financial inclusion by using digital technologies. Please join me in giving a warm welcome to Governor Subbarao. 4/4