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Department of Economics, Centre for Macroeconomics, Systemic Risk Centre
and International Growth Centre public lecture
Making Markets Fair and Effective
Dr Minouche Shafik
Deputy Governor, Bank of England
Professor Lord Stern
Chair, LSE
Suggested hashtag for Twitter users: #LSEBoE
Figure 1 - Global financial assets
US$ trillions
Corporate bonds
120
Financial companies' bonds
100
Government bonds
Nominal world GDP
80
60
40
20
0
2000
2005
2006
2007
2008
2009
2010
2011
2012
2013
Source: McKinsey and IMF. Bond values are at end-year, constant 2013 exchange rates, based on a sample
of 183 countries.
Figure 2 - Market value of FICC
derivatives contracts
US$ trillions
Other
Credit default swaps
Commodity contracts
Interest rate contracts
Foreign exchange contracts
35
30
25
20
15
10
5
0
Jun 98
Jun 00
Jun 02
Jun 04
Source: BIS semiannual survey of OTC derivatives.
Jun 06
Jun 08
Jun 10
Jun 12
Figure 3 – The Review framework
Potential source
of vulnerability
Structure
Market
microstructure
Competition and
market discipline
Benchmarks
Conduct
Standards of
market practice
Responsibilities,
governance and
incentives
Surveillance and
penalties
Market
Possible responses by
Firm
Individual
Regulator/
Legislator
Department of Economics, Centre for Macroeconomics, Systemic Risk Centre
and International Growth Centre public lecture
Making Markets Fair and Effective
Dr Minouche Shafik
Deputy Governor, Bank of England
Professor Lord Stern
Chair, LSE
Suggested hashtag for Twitter users: #LSEBoE