In the discussion over the correct relation of economic policy to the bubbles building up on the asset market, there is a dominant conviction that the supervisory policy is a much better response. For this very reason, supervision over financial markets should be independent of politicians, as it may turn out necessary to take up actions aimed at limiting the rate of building up of the speculative bubble at a time when it is not convenient for politicians, considering the elections cycle. New challenges for regulators/supervisors Globalization of financial markets changes the operation conditions of financial institutions by opening new development opportunities for them, but also by creating new types of risk for the stability of the financial systems. Globalization creates new opportunities in the area of risk management, including but not limited to the most important banking risk, i.e. the credit risk. Development of new risk transfer instruments (credit derivatives and securitisation) and increase in the number of their purchasers enable more effective use of banks’ capital. New instruments, however, pose some threats. 40 Both market participants and markets supervisors indicate the issues of progressive complexity of derivatives, and difficulties in complete understanding and estimating the risk related thereto. 41 Difficulty in evaluating risk flow directions and lack of basic data on some unregulated financial institutions, which are becoming increasingly active on the derivatives market, are also a problem. What I mean here are in particular the hedge funds, which manage increasing funds.

11 Moreover, domestic banks that compete with foreign banks exhibit more interest in introducing new accounting standards and financial reporting requirements, so that better quality of information on the companies financed allows them to extend more profitable loans. Domestic financial institutions are becoming more efficient, due the new technologies and best practice provided to the market by foreign companies. Integration of financial markets worldwide enables better risk diversification. Residents do not have to invest their savings in their own country and thus they are not exposed to the business cycle risk. They are free to invest in many countries and could obtain a better ratio of expected return to assumed risk. Globalization of financial markets also entails new challenges and threats. The lack of transparency, resulting from asymmetry, raises the risk of speculative bubbles and herd behaviour of investors. Uneven access to information in the global markets environment may lead to a negative selection in the financing of the enterprise sector and the moral hazard in a situation where the bankruptcy of a given institution would jeopardize the banking sector. 12 Economic reforms and opening the country to international trade in the emerging markets attract foreign capital, which, however, in the case of deteriorating economic situation, is withdrawn quickly. This invokes FX crises, which, as a result of an increase in interest rates, may turn into bank crises. 13 Additionally, international links of institutions and the speed of transmission of information among markets streamline the spreading of such crises over other economies.