Substantial progress has been made to strengthen this infrastructure over the past two and a half years, and the resilience of the broader financial infrastructure has been a source of strength for the financial system during this crisis. However, the systems and practices that support the over-the-counter (OTC) derivatives market significantly lags that of securities markets and other mature markets. We need to move quickly to put in place a more integrated operational infrastructure that supports all major OTC derivatives products, is highly automated, has robust operational resilience and risk management, and is capable of handling very substantial growth in volumes. Conclusion The U.S. economic and financial system is undergoing a very challenging period of adjustment, and we are likely to be living with a high degree of uncertainty for some period of  6  BIS Review 27/2008  time about the ultimate magnitude and duration of the slowdown underway. But it is important to recognize that we have already seen a lot of adjustment. Prices and risk premia in many markets already reflect a much more sober and cautious view of the world than they did a year ago. And the degree of stress on markets that we have seen over the past six months is due in part to the sheer magnitude and speed of that adjustment to a more cautious view of the future. The United States, the world economy, and the financial system as a whole, are more resilient, than they were on the eve of previous downturns.
The consequence is that investors in search of these securities increasingly need to pay a premium, a specialness premium, which, broadly speaking, reflects the costs of the difficulty in finding a lender of the security. The premium will then depend on the scarcity of the underlying 3 / 10  BIS central bankers' speeches  asset and their holding structure: many of the residual government bond holders are unwilling to sell them, or will sell them at a higher price due to regulation or their own asset-liability management rules. You can see this on my next slide. Our asset purchases have coincided with a notable increase in the share of German bonds that trade “special” in the repo market, meaning they trade at a premium over GC rates. Before we started our purchases, typically less than 5% of bonds in the German repo market were trading special. In the second half of last year, this share increased to more than 50%. Year-end events, which I will come back to later, pushed their share even higher. You can also see that specialness did not increase immediately with the start of our purchases under the public sector purchase programme (PSPP) in March 2015. The reason might be related to potential non-linearities in the way supply changes affect market outcomes. That is, price effects from the flow of purchases may only become visible the moment supply effectively starts to constrain demand. Reverse supply effects are also clearly visible on the same chart.