Coinciding with the stock market boom in the late 1990s and 2000, corporations in the euro area raised significant amounts of equity capital. New companies, often in the high-tech field, obtained listings at specialised “new markets” stock exchanges for high-growth companies. The amount of new capital raised on euro area stock markets increased from € billion in 1998 to € billion in 2000, when stock prices were at their peak. The growth of the euro area stock markets, in terms of the ratio between market capitalisation and nominal gross domestic product, has been staggering. Over a period of ten years, from 1990 to 2000 - when prices were at their highest level - this ratio increased about fourfold. With the benefit of hindsight, the belief in enormous potential profits stemming from investments in “new economy” corporations resulted in a stock market rally, which broke all previous records. Valuations of internet-related companies reached levels that were extraordinary by basically all standards. In March 2000, the monthly average price-earnings ratio of stocks in the technology, media and telecommunications sectors peaked at 70, compared with an average of around 13 over the previous 25 years. It seemed that the sky had finally become the limit indeed and that a new era had arrived. In parallel with the rise in stock prices, stock market volatility jumped: the historical volatility of the Nasdaq Composite Index almost doubled from 1999 to 2000.

8  The current version of TMPG’s Best Practices for Treasury, Agency Debt, and Agency Mortgage-Backed Securities Markets is available here. 9  Such documentation includes, but is not limited to, FX master agreements, FX non-deliverable transaction documents, and FX master give-up agreements. BIS central bankers’ speeches  3  participants contribute their expertise and have a sense of ownership in the process. By integrating best practices within their own institutions, private-sector participants support market adoption. 10 Central banks – with their public orientation and interest in the integrity and effectiveness of markets – can further encourage broad adoption of best practices. 11 Third, central bank support can also help broaden the composition of those engaged in designing best practices. The New York Fed strives to have all important segments of the market represented in the membership composition of the groups it sponsors. For example, the TMPG recently added individuals who have experience at a regional broker dealer and a high-frequency trading firm to broaden the views and perspectives on the committee. FXC membership has also evolved significantly since the group’s inception. Both committees include institutions from the sell-side, buy-side, as well as infrastructure providers, such as trading venues. Central banks, and their counterparts, also encourage international collaboration. Such collaboration has increased over time and has reached a significant milestone through the work to develop an FX Global Code. This work spans sixteen different central banks, covering major financial centers in advanced and emerging market economies, and it includes a set of private-sector market participants.