On the supply side, the major markets China, India and ASEAN have made good progress in market reforms and cross-border connectivity. Allow me to elaborate on some recent measures. 9 China has facilitated greater cross-border investment flows and allowed for more crossborder market activities. In the past year alone, China liberalised access to the interbank bond market to foreign financial institutions and institutional investors. Offshore corporates can now tap the onshore market for Panda bond issuances, while Chinese corporates in certain parts of China – such as Chongqing, Suzhou and Tianjin – can issue bonds in offshore markets and repatriate the proceeds to support onshore economic activities. 10 India has likewise liberalised cross-border capital market activities. Indian banks and corporates are now allowed to issue Rupee-denominated bonds overseas as part of their external commercial borrowings which enables Indian issuers to diversify their funding base and achieve more efficient cost of funding. 11 In ASEAN, capital market development and integration efforts are underway. The ASEAN Trading Link provides investors with a single screen to access stock exchanges in Malaysia, Thailand and Singapore. These three jurisdictions have also adopted fully harmonised prospectus disclosure requirements known as the ASEAN Disclosure Standards, which facilitate the multi-jurisdictional offering of equity as well as debt. The ASEAN Collective Investment Framework (CIS) was launched in 2014 to facilitate cross-border offering of CIS to retail investors in Malaysia, Singapore and Thailand, under a streamlined authorisation process. A total of 12 funds are now available under the Framework.

Cooperation between the Committee on Payments and Settlement Systems and the International Organisation of Securities Commissions (CPSS-IOSCO) on the one hand, and the Basel Committee on Banking Supervision (BCBS) on the other hand, is key in this respect. A macroeconomic impact assessment led by the BIS focused on the effects of these reforms and found net benefits of 0.12% of GDP per year. These are estimates of the long-run consequences of the reforms and are expected to apply once those reforms have been fully implemented and produced their full economic effects. However, central clearing also involves risk redistribution and potentially the creation of new risks. The overall impact is therefore less certain: there are significant benefits which need to be balanced against potential new risks and uncertain risk redistribution effects. Ultimately, it seems to me that the success of central clearing as a tool for promoting financial stability critically depends on two factors: (i) the ability of CCPs to handle the risks they are concentrating and thus the design of their corporate governance, risk management and recovery frameworks and (ii) the ability of the official sector to address effectively any unintended side effects and “new” risks that may result from the push towards more central clearing. Recovery versus resolution of CCPs [slide 6] A second issue that I should like to highlight today concerns the relationship between recovery and resolution of CCPs.