joachim nagel : el economista speech by dr joachim nagel, president of the deutsche bundesbank, in honour of mr pablo hernandez de cos, governor of the bank of spain and recipient of the echegaray prize, madrid, 2 november 2022. * * * 1 introduction ladies and gentlemen, today we are celebrating the award of the echegaray prize to an outstanding economist and central banker. pablo, it is a great pleasure for me to speak at this wonderful event in your honour here in madrid. i could certainly talk for a long time about all your achievements and merits, but my time is limited, so i will have to remain brief. 2 life path and achievements allow me first to say a few words about you, your life path and your major achievements. pablo hernandez de cos was born on january 20, 1971. his family originates from santander, a beautiful region in the north of spain. this region is, i guess, more green but less sunny than average for the country. he graduated in economics and business administration at the university college of financial studies in madrid in 1993 and in law at the national university of distance education the following year. his career as a central banker started in 1997, when he joined the research division of the department of monetary and financial studies at the banco de espana as a senior economist. a year later, he moved to the economic policy analysis division at the department of economic analysis and forecasting, where he stayed until 2004. as you can see, pablo is familiar with the groundwork carried out by economists at central banks. he was one of the economic experts that central banks are famous for. perhaps i am stressing this point because i believe that getting to know a central bank from its heart is a highly valuable experience. in this period, pablo not only worked as a senior economist at a central bank, he also got his phd at the same time. a great achievement! meanwhile, he also opened a chapter in his life that someone from frankfurt like me is especially pleased to talk about : in 2000 he came to this city for the first time as a country expert at the ecb, staying for a few months. after receiving his doctoral degree, he deepened his frankfurt connection further and became an advisor to the executive board of the ecb in 2004. his second frankfurt experience lasted much longer, spanning three years until 2007. his first child was even born in frankfurt. this gives me reason to hope that he can

: / / www. sifma. org / research / statistics. aspx. bis central bankers ’ speeches changes to market structure the foreign exchange market is a dynamic market with a long history of change and innovation. today, i would like to focus on two of the more significant recent changes in the market ’ s structure : first, the broadening of participation, and second, how execution is taking place within the market. participation in the fx market the broadening of participation in the foreign exchange market is one reason why growth in fx trading volumes has far outpaced growth in global trade. the bis triennial survey on foreign exchange market activity provides evidence of the degree to which this expanded participation is taking place. 4 traditionally, volumes in the foreign exchange market were dominated by what is known as the inter - dealer market – trading between dealers. however, in the 2010 survey, the largest share of volume reported by dealer respondents was for transactions with “ other financial institutions ” – a category that includes nonreporting banks ; 5 other financial institutions such as institutional investors, hedge funds, and proprietary trading firms ; and official sector institutions. this shift continued through the 2013 survey, when “ other financial institutions ” accounted for just over half of reported volume, reinforcing evidence of a broadening in foreign exchange trading, with nondealers playing a greater role in the market. the 2013 survey broke out the “ other financial institutions ” category for the first time. the data showed that nonreporting banks accounted for about 45 percent of the category ’ s trading volume while institutional investors and hedge funds / proprietary trading firms each accounted for about 20 percent. in a market where daily trading volume exceeds $ 5 trillion, this represents significant activity and is consistent with a general theme of increased participation by nondealers in the fx market. execution in the fx market one factor contributing to the expansion in participation by nondealers in the foreign exchange market has been the increased ease of entry into the market, attributable to an expansion in the number of execution platforms and services. in part, this has been supported by technological advancements, which, in some cases, have reduced trading costs, increased the speed with which transactions take place, and improved transparency. electronic trading activity in foreign exchange markets, as well as in other markets, has played a growing role, and some reports suggest it may represent as much as 70 percent of daily turnover in the foreign exchange market, up from roughly