9 The global financial market enables business entities, including banks, to raise funds for business development from a larger number of investors than it would have been possible on domestic markets. For instance, in many smaller EU countries, a significant number of bank transactions is carried out with foreign partners. 10 Access to the international capital market for banks and other financial institutions translates not only to the possibility of development, but also to the pressure on improvement of efficiency. The growing  4  Galati G. “Settlement risk in foreign exchange markets and CLS Bank”, w: “BIS Quarterly Review” December 2002, Bank for International Settlements, pp. 55-65. 5  “CLS - purpose, concept and implications”, in: “ECB Monthly Bulletin”, January 2003, European Central Bank, pp. 53-65. 6  Rajan R. “Has financial development made the world riskier?”, Working paper 11728, NBER 2005. 7  Stulz R. “Globalization of equity market and the cost of capital”, Working paper 7021, NBER 1999. 8  Mishkin F. “Is financial globalization beneficial?”, Working paper 11891, NBER 2005. 9  Hardouvelis G., Malliaropulos D., Priestley R., “The impact of globalization on the equity cost of capital”, CEPR Discussion paper 4346, 2004. 10  Schoenmaker D., Oosterioo S. “Cross-Border Issues in European Financial Supervision”, in: Mayes D., Wood G. (editors) “The Structure of Financial Regulation”, London 2005. 8  BIS Review 60/2006  efficiency and better risk management improves the security of deposits placed with banks. Foreign competition is also an important catalyst for dissemination of financial innovations.

The terrorist attack of 11 September 2001 has revealed how far-reaching implications for the international payment system may be brought about by switching off a large-value payment system in a single country. In the circumstances of the increasingly integrated financial markets, central banks must also cooperate more closely and have their contingency plans in place to inject liquidity to the global financial system in a crisis situation. 48 The private sector goes even further to suggest that in a crisis situation central banks should extend intraday credit facility to all banks (not only the domestic ones). Intraday credit could be collateralized by foreign currencies or securities denominated in foreign currencies – cross-border collateral pool facilities. 49  Conclusions Ladies and Gentlemen, globalization of financial markets, trade, manufacturing, services and knowledge is a great opportunity for the global economy. Owing to this process, the developing countries may modernise and grow faster than they have ever done before. On the other hand, both manufacturers and consumers in the developed countries take advantage of the access to the huge global labour market, which makes it possible to lower the costs of manufacturing, enhance productivity and – consequently – lower the prices of many goods and services. Both consumers and producers are also beneficiaries of globalization of the financial markets, which offer a wide range of products and enable a better adjustment of the risk profile and the expected return or cost to the preferences of investors and borrowers. Globalization also has its drawbacks.