It reflects the banks’ loss of confidence in conducting transactions on an unsecured basis since the beginning of the financial crisis. This trend has not been reversed, as we can see from chart 6. Activity on the money market has shifted towards the secured segment – in Switzerland towards the repo market (shown in blue). Following the substantial injection of liquidity in the wake of the SNB’s interventions, activity in this segment has also declined. However, the sizeable liquidity surplus has not reduced volume to zero. In fact, the introduction of negative interest on sight deposit accounts at the SNB has prompted banks to arbitrage their exempted amounts. In addition, banks have continued to trade in repos, in order to exchange the corresponding collateral. Collateral management tends to gain in importance in response to ever-stricter regulation. Insurance companies are likewise active in the market, for liquidity management purposes. In this changing context, the money market has performed its role as a monetary policy transmission channel to the fullest extent. Following the introduction of a –0.75% negative interest rate on sight deposit accounts at the SNB at the beginning of 2015, the various money market interest rates rapidly moved into negative territory, as chart 7 shows. The decline also spread to yields on bond and credit markets. To ensure the smooth functioning of the capital market and the effective transmission of monetary policy regardless of the circumstances, the quality of the money market infrastructure plays a key role.

Zeti Akhtar Aziz: Global financial stability and the internationalisation of financial systems in emerging economies Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the EuromoneyQatar Conference “Global financial stability and the internationalisation of financial systems in emerging economies”, Doha, 11 December 2012. *  *  *  It is my honour to be here in Doha to speak at this Euromoney-Qatar Conference on “Global Finance Re-designed”. I wish to thank the Qatar Central Bank for the invitation to speak at this event. In this current global environment, the unprecedented and wide ranging global policy responses have yet to produce financial stability and a sustainable recovery of the global economy. The intensification of the globalization of finance in this decade has resulted in an even more connected and interdependent world. While the financial systems and economies in most parts of the world felt the effects of the recent global financial crisis, it has not discouraged the pace of internationalization of financial systems, in particular, in emerging economies. My address this morning will be on financial stability and the internationalization of financial systems in emerging economies. My remarks will cover the benefits and challenges of such internationalization, the lessons that can be drawn from the recent global financial crisis, the Malaysian experience on the internationalization of our financial system. Benefits and challenges of internationalisation of financial systems While there are significant benefits from internationalization of financial systems, the resulting increased international financial integration brings with it new risks and challenges.