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The difficulties in establishing a well-functioning financial and political structure at the supranational level reflects the general change of perspective on the financial sector, Mrs Tumpel-Gugerell said. An important thing that the financial turmoil has demonstrated is that national degrees of trust, transparency and co-operation have not yet been replicated on an international, global level, she continued. This includes the existence of appropriate supervisory structures.
Mrs Tumpel-Gugerell identified three long-term trends in the financial sector that have had an impact on liquidity management and market infrastructures, namely technological and financial innovations, cross-border financial flows and cross-border banking, and the tendency towards concentrated provision of infrastructural services, and increased internalisation of payment flows in correspondent banks, bluring the distinction between intermediaries and infrastructure providers.
Challenges, especially from the perspective of market infrastructures, resulting from these trends include growing interdependencies, the potential emergence of a global monopoly, and the need for well-functioning financial and political structures at the supranational level, she said.
Financial market participants need to take into account the increased interdependencies, she said. Systems and institutions need to look beyond their own operations and direct exposures to understand the broad range of disruptions that might affect them.
With regard to the trend towards concentration Mrs Tumpel-Gugerell prefers to complement the European Monetary Union with harmonised and efficient market infrastructures in certain areas. “I do not expect the utopian idea of a single, globally integrated infrastructure to become reality”, she said. “It is crucial that these platforms will be transparent, provide open access to potential users and enable inter-operability with other platforms”.
Also, overseers need to co-operate and to show a certain degree of convergence in order to avoid regulatory arbitrage and a “race to the bottom” of regulatory standards, she noted and also called for co-operation between oversight of market infrastructures and banking supervision.