Hence, the joint application of short-term interest rate cuts, asset purchases, special financing operations aimed at banks and an active communication policy of the part of the ECB Governing Council have all allowed the yield curve to ease in recent years. This has had a most notable impact on financing conditions for all agents, public and private alike, within the area.9 It is important this complementarity be maintained with the new measures, should they prove necessary, in order to maximise their effectiveness. Indeed, following the adjustments recently made to the ECB Governing Council’s communication, market interest rates in all segments have continued to decline, and the yield on the GDP-weighted euro area 10-year sovereign bond has fallen to below 0.2%. The sovereign bond risk premia relative to the German benchmark and the yield spreads on corporate bonds have also declined. Notwithstanding the monetary policy decisions that may have to be adopted in the short term, I believe this setting also calls for some thoughts on the medium-term monetary policy strategy. It should be borne in mind that, insofar as interest rates hold at levels close to their effective lower bound for a longer period, central banks will have less headroom to cut rates in response to future crises. They also have to resort more frequently to less conventional measures to increase their balance sheets. This situation has led some central banks to discuss possible alternatives to the current monetary policy strategy, aimed at countering the constraint of the effective lower bound of interest rates.
For instance, the recent Level 3 assessment by CPMI-IOSCO on the implementation of the PFMI5 by ten CCPs (including SGX-DC) helped to identify gaps and shortcomings which CPMI-IOSCO expects to be addressed by the CCPs and their respective regulators by the end of the year. As outstanding issues are addressed and the progress tracked, regulators should also have greater confidence in undertaking their equivalence assessments of CCPs that their domestic market participants can access. This can then provide greater certainty to global market participants. 2/4  BIS central bankers' speeches  Improving market access for CCPs Singapore, as with other jurisdictions, will be commencing our clearing mandate next year thereby enhancing the role of CCPs as a risk mitigating tool. However, a clearing mandate cannot be effectively implemented if access to CCP remains an issue for counterparties, particularly smaller players. We share similar concerns to those that have been expressed by ESMA. In this regard, it is noteworthy that ESMA has looked into possible ways to improve CCP access and has, for example, proposed indirect clearing arrangements which strikes a balance between having an appropriate level of indirect client protection and counterparty risk. I hope today’s forum will allow MAS and other regulators to learn from ESMA’s insights. To enable a wider range of market participants – including those based outside Singapore - to have direct access to CCPs in Singapore, MAS will allow our CCPs to introduce self-clearing and remote clearing memberships.