The combination of this macroeconomic news and central bank action means the assumed known of “low-for-long” (but positive) policy rates which market participants could cite as little as a year ago has been replaced by a less than certain landscape, helping to explain why “baseline” volatility has picked up since last summer. But while this increase in macroeconomic uncertainty and central bank activity can explain some of the general increase in the level of volatility, it cannot explain the severity of events such as 15 October or 15 January. To explain these events we probably need to look elsewhere. The obvious place to turn to is market structure, given that FICC markets, which rely on intermediaries to make markets and warehouse risk, are going through considerable change. Here I want to highlight two important contributing themes noted by market participants in our Fair and Effective Markets Review, both related to the provision of liquidity. First, market makers have become more reluctant to commit capital to warehousing risk. During our market intelligence conversations some have suggested that this reflects a combination of reduced risk tolerance since the financial crisis, and the impact of regulation designed to improve the resilience of the financial system. This reduction in market making capacity has been associated with increased concentration in many FICC markets, as firms have been more discriminating about the markets which they make, or the clients they serve. And this trend has gone hand-in-hand with a growth in assets under management by the buy-side community.

More than half of the global population already live in cities. There are 23 megacities today; and it is projected that this number will double by 2030. Most of these new megacities will be in South and East Asia. OECD estimates that more than half of the infrastructure needed by 2030 has not been built yet. Growing cities will need to simultaneously deal with the problems of scarce resources and climate change. Even developed countries can be vulnerable to extreme climate changes. Hurricane Sandy left a quarter of New York City’s population without electricity, and shut down vital transport infrastructure including all 3 airports and all subway lines. Whether or not a global agreement on mitigating the effects of climate change is reached or not, there will be tremendous business opportunities for companies that can provide solutions to address the challenges of resource efficiency and to back up vulnerable systems and infrastructure. Innovative urban solutions and investments in infrastructure R&D will be sorely needed. As an early adopter of sustainable development strategies, Singapore is happy to share our experience learnt from sustainable growth strategies. The annual World Cities Summit, hosted in Singapore, serves as a platform for the exchange of leading-edge ideas on building liveable and sustainable cities. Beyond the exchange of ideas, Singapore is pushing the boundaries in sustainability research. Two National Innovation Challenge programmes are currently on-going,  2  BIS central bankers’ speeches  addressing the themes of 1) Energy Resilience for Sustainable Growth and 2) Land and Liveability.