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Modern Banking and OTC Derivatives Markets : The Transformation of Global Finance and its Implications for Systemic Risk
Authors: --- --- ---
ISBN: 1462303773 1452721734 1557759995 9781557759993 Year: 2001 Volume: 203 Publisher: Washington, D.C. : International Monetary Fund,

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Abstract

This chapter provides an overview of market practices, market structure, and official supervision and regulation in financial markets. This paper also highlights the key features of modern banking and over the counter (OTC) derivatives markets that seem to be relevant for assessing their functioning, their implications for systemic financial risks in the international financial system, and areas where improvements in ensuring financial stability can be obtained. The paper also describes how OTC derivatives activities have transformed modern financial intermediation and discusses how internationally active financial institutions have become exposed to additional sources of instability because of their large and dynamic exposures to the counterparty (credit) risks embodied in their OTC derivatives activities. In order to rebalance private and official roles, it is essential first to clarify the limits to market discipline in OTC derivatives markets, before leaning more heavily on aspects of market discipline that seem to work well in these markets.

Keywords

Over-the-counter markets --- AA* / International - Internationaal --- 332.632 --- OTC markets --- Over-the-counter securities --- Unlisted securities markets --- Over-the-counter markets. --- Derivative securities --- International finance --- Risk --- 330.05 --- banques --- marche international financier --- banken --- financiën --- 333.109 --- 333.605 --- 339.7 --- Economics --- Uncertainty --- Probabilities --- Profit --- Risk-return relationships --- International monetary system --- International money --- Finance --- International economic relations --- Securities --- Derivative financial instruments --- Derivative financial products --- Derivative instruments --- Derivatives (Finance) --- Financial derivatives --- Structured notes (Securities) --- 339.7 Internationale financien. Buitenlands betalingsverkeer --(z.o {336}) --- Internationale financien. Buitenlands betalingsverkeer --(z.o {336}) --- internationale financiele markt --- Veiligheid. Bankovervallen. Bankrisico's --- Nieuwe financiële instrumenten --- Working papers --- Derivative securities. --- International finance. --- Risk. --- Banks and Banking --- Finance: General --- Investments: General --- Investments: Options --- Money and Monetary Policy --- General Financial Markets: General (includes Measurement and Data) --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Financing Policy --- Financial Risk and Risk Management --- Capital and Ownership Structure --- Value of Firms --- Goodwill --- Taxation, Subsidies, and Revenue: General --- Monetary economics --- Financial services law & regulation --- Investment & securities --- Public finance & taxation --- Derivative markets --- Credit --- Options --- Credit risk --- Financial markets --- Money --- Financial institutions --- Financial regulation and supervision --- Financial instruments --- Financial risk management --- Revenue --- United States

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