Adoption of the Hague Securities Convention by countries around the world will improve legal certainty for cross-border collateral arrangements, which is important for bilateral counterparties, clearing and settlement systems. And there are new market-led initiatives underway to bring some utility-type clearing services to the present bilateral arrangements for OTC derivatives. These efforts to improve the clearing and settlement infrastructure for the OTC derivatives market are important because they help make it easier for firms to understand and manage their bilateral risk exposures. Markets work better, particularly in times of stress, when firms are able to operate with greater certainty about their direct counterparty exposures. In this context, it is worth reflecting on whether it makes sense to build on these efforts by developing and utilizing central counterparty clearing arrangements in the more standardized part of the OTC derivative market. To be sure, poorly designed central counterparties can increase risk, and they necessarily concentrate operational risk. But well designed central counterparties can play an important role in reducing systemic risk in markets. This is a complicated challenge for instruments that are inherently complex and constantly evolving, and for which calculating exposures can be difficult. And attracting a critical mass of strong participants can be daunting. But it makes sense to think about whether use of a centralized clearing utility could provide significant advantages over the present bilateral arrangements by increasing transparency, enabling multilateral netting, and providing centralized risk controls, collateral management, and margin requirements.
This monetary policy stance has meant that long-term interest rates in the advanced economies have held at very low levels, while very generous pricing in certain financial markets has been the case. Indeed, some prices are at all-time highs, in a setting in which  BIS central bankers’ speeches  1  investor yield search appears to be playing a predominant role compared with other considerations based more on the fundamentals of these assets. This scenario on international money and financial markets poses risks, as it is likely to undergo abrupt changes in the face of expectations emerging over the withdrawal of monetary stimuli or, what comes down to the same, of expectations over sustainable improvements in growth rates that advise less expansionary monetary policies. Developments in and outlook for the Spanish economy In the course of 2013 the Spanish economy showed a degree of dynamism and, from the third quarter onwards, positive GDP growth rates. This trajectory has continued into 2014, meaning that the year might finalise on a path in line with the forecast forwarded in the Spanish Economic Projections Report published by the Banco de España in March, that is to say, with annual average growth of 1.2%. This recovery has also been discernible in the labour market. The pace of job destruction slackened in 2013, until showing slight job creation in the closing months of the year. The improvement has progressively strengthened to date in 2014.