Perhaps that is why marriage rates have halved, and divorce rates doubled, in the UK since 1970; why the tenure of global CEOs has halved since 1995; and why holding periods for stocks has more than halved since 1980. For many key decisions, myopia has been mounting. It may also have become self-reinforcing – a myopia trap. For addicts, shortened horizons generate a quest for quick fixes which further shorten horizons in a downward spiral (Coffey et al. (2003)). For gamblers, a sequence of losses shortens horizons and increases risk-  BIS central bankers’ speeches  3  taking (Xiu et al. (2011)). For depression-sufferers, low confidence in the future becomes self-fulfilling (Alloy and Ahrens (1987)). Myopia traps affect countries as well as individuals – and their macro-economic costs can be large. For developing countries, they often materialise as “poverty traps” (Sachs (2005)). That trap is self-sustaining because poverty leads to under-investment in the human and financial capital that would allow the country to break free in the future (Banerjee and Duflo (2011)). Low future prospects for growth become self-fulfilling. Advanced economies are not immune to these problems. An information-rich-attention-poor world will generate under-investment in physical and human capital, infrastructure, the environment. That will be self-sustaining if it lowers future prospects or heightens future risks (Davies et al. (2013)). More hurry then assuredly means less speed. This is not a poverty trap. It is a poverty of attention trap. Policymakers have recently begun to focus on shorttermism, perhaps for that reason (G30 (2012), FSB (2013)).

To the extent these advantages can be realized, a centralized utility can reduce the risk of damaging contagion from a failure of a financial institution affecting overall market liquidity. By making some types of losses more predictable, they can reduce the incentive for firms to withdraw liquidity from and reduce exposure to other counterparties that they believe might have credit exposures to the failed institution. Global integration of payments systems The increase in cross-border financial activity, the global reach of the largest financial institutions, and as a consequence the greater transnational scope of many payments systems have provided a compelling rationale for cooperation to set a higher level of international standards for payments and settlement systems. These same dynamics may lead eventually to a more uniform international platform for payments and settlement concentrated on a much smaller number of systems. But we are not there yet. The myriad of different systems that make up the global network means that payments now cross a complicated mix of legal, technological, and supervisory borders. And this means banks are exposed to settlement risk in a remarkably large number of different value transfer systems. One large U.S. internationally active financial institution now operates in 400 separate payments systems around the world. Differences in legal regimes mean different netting arrangements, collateral requirements, close-out procedures, and bankruptcy implications. Differences in operating platforms and communications standards can increase operational risks.