Despite the trauma of the global financial crisis last year, there have been no signs of an overall slowdown. According to the US Federal Reserve Board, the notional value of derivatives contracts outstanding at US commercial banks, the leading players in global derivatives markets, grew by more than 30% last year: this is the most rapid annual growth since 1994. The sheer volume of derivatives trading does not say much about their associated risks. These new financial instruments have undeniably helped investors to unbundle their risks. They have promoted investments and generated substantial benefits to the developing countries receiving such investments. However, the availability of derivative instruments has also increased the opportunities for speculation that resulted in significant losses with the downturn in markets during the financial crisis. 3  BIS Review 47/1999  The use of swaps, futures, forwards, and other derivative instruments have enabled investors to take on far greater exposure relative to their capital, and to greatly increase the potential for loss. Market Stability and Highly Leveraged Institutions Let me make it clear that the losses or gains by large financial market participants should not be a concern to regulatory authorities. Nor should the positions taken by individual market participants normally be of any concern. Speculators or investors, in essence, buy low/sell high or sell high/buy low, thereby providing liquidity to markets. However, there are two situations in which the very large positions taken by highly leveraged institutions are of particular concern to regulators.
Michelle Neal: Advances in digital currency experimentation Remarks by Ms Michelle Neal, Executive Vice President and Head of Markets of the Federal Reserve Bank of New York, at the Singapore FinTech Festival 2022, Singapore, 4 November 2022. ***  As prepared for delivery Good afternoon. It is a pleasure to be here with you at the Singapore Fintech Festival. It is exciting to be a part of this gathering of industry professionals, policy leaders, and investors to discuss key developments in the fintech industry. Digital innovation has the potential to benefit the financial system writ large by reducing transaction costs, increasing competition, and broadening access to a wider range of participants. However, harnessing the full potential of financial innovation and related technologies – especially regarding cross-border settlements and payments – will require collaboration across a range of international partners. In my remarks today I will discuss the landscape of digital assets and some of the ways that the Federal Reserve System is engaging in research and experimentation that support ongoing innovation. As always, the views I express today are my own, and do not necessarily reflect those of the Federal Reserve Bank of New York or the Federal Reserve System. Digital Assets and the Federal Reserve We are all experiencing the incredible pace of growth and change within the digital asset domain, which encompasses a range of opportunities and risks.