One particular development I’d like to highlight, and one that’s quite fitting for discussion at today’s forum, is the development of derivatives markets. Derivative markets offer cost-effective ways to manoeuvre investments; more importantly, they are effective risk mitigation tools. In the context of Asia, where cross-border flows are large and where 2/4  BIS central bankers' speeches  opportunities for foreign investors are plentiful, derivatives can help investors deploy capital without being subject to excessive short-term price fluctuations, by hedging out currency and interest rate risks. The upshot here is that capital can then be allocated to usages that benefit long-term economic development in the region. Now, I note this as a “development”, because there’s plenty of room for growth in Asia’s derivative markets: according to a recent report by the Committee on Global Financial Systems, or the CGFS, in most Asian economies, average daily trading volumes for derivatives remain strikingly low compared to advanced economies, even those that are not major financial centres. In addition, almost half of the market participants surveyed by the CGFS expressed at least “some” concerns that the functioning of derivative markets in emerging market economies in general do not adequately complement their respective capital markets, with about 20 percent indicating “significant concerns”. Aside from the limited turnover size, I suspect that geography also plays a role in this rather downbeat assessment – many Asian-related derivative trades are in fact not booked or risk-managed in Asia!
We will really try hard to explain that what we are doing is in the interest of the euro area, Germany included. 2  BIS central bankers’ speeches  In your book, you talk about the isolation of the central banks. Do you feel that strongly at the moment? Central banks are independent, but they are not isolated. In Europe, however, we need a coherent approach across monetary policy, fiscal policy and structural reform policy, as emphasised by President Draghi at the Jackson Hole conference (at the end of August [ed.]). The understandable instinct of the governments is to respond to their voters. This is never easy and it becomes even more difficult in an environment of low growth and high unemployment. But our plea to the governments is to always remember Europe’s common interest, because the actions of one affect all the others. That is why they must be coordinated. Do you feel more mature, at the ECB, after last Thursday? This is not about being mature, but about providing the right answers to a new situation, as the ECB has always done throughout the crisis. Now, with asset purchases, we are like the other central banks, but with an instrument that is adapted to our specific environment, i.e. an environment which does not foresee a common fiscal policy. We are conducting QE in our own way. BIS central bankers’ speeches  3