we were ably and vigorously supported by a group of market participants, chaired by david puth, ceo of cls. david ’ s group contained people from all around the world on the buy side, including corporates and asset managers, and the sell side, along with trading platforms, ecns and non - bank participants, drawing from the various foreign exchange committees ( fxcs ) and beyond. all parts of the market were involved in the drafting of the code to make sure all perspectives were heard and appropriately reflected. there are two important points worth highlighting : first, it ’ s a single code for the whole industry and second, it ’ s a global code. on the first point, the code supplants the existing codes that have been present in the fx market. so there is now one single code. importantly, the code covers all of the wholesale fx industry. this is not a code for just the sell side. it is there for the sell side, the buy side, non - bank participants and the platforms ; it reaches around the globe and across the whole industry. the way it is relevant will depend on the nature of the engagement with the fx market. what this 1 / 4 bis central bankers'speeches means in practice is that the steps different market participants take to align their activities with the principles of the code will differ, reflecting the size, complexity, type and extent of their engagement with the fx market. on the second point, it ’ s a global code : our group contained representatives from the central bank and private sector from all the 16 largest fx centres, including both developed and emerging markets. the first phase of the code was released in may 2016. it covered areas such as ethics, information sharing, aspects of execution and confirmation and settlement. the second phase covered further aspects of execution including e - trading and platforms, prime brokerage, as well as governance, and risk management and compliance. the complete code comprises 55 principles spanning these issues. the principles are written in plain language and should be easily read and understood by market participants. the principles are supplemented by a suite of examples to illustrate their practical application. market participants had a number of opportunities to comment on the code, in addition to the direct input of the market participants group. before its release, drafts of the full text of the code were distributed to market participants for their review, principally through the various fxcs, but also through other industry associations to ensure all perspectives were appropriately reflected in the code. through

macroprudential regulation and policy, bis papers 60. kiyotaki, n. and moore, j. ( 1997 ), “ credit cycles ”, journal of political economy. bis central bankers ’ speeches negative shocks ( lorenzoni ( 2008 ), 4 bianchi and mendoza ( 2010 ), 5 korinek and jeanne ( 2010 ). 6 in brunnermeier and sannikov ( 2014 ) 7 the same “ collateral amplification ” mechanism is taken a step further and shown to generate endogenous leverage and volatility cycles. long booms boost bank capital ratios to such an extent that credit availability stops being a constraint on economic activity. this endogenously leads to a great moderation in output and asset price volatility which encourages banks to lever up further. then the system becomes highly vulnerable to shocks in what is now widely known as the “ stability paradox ”. mars has made significant contributions to the modelling of boom - bust cycles. boissay, collard and smets ( 2012 ), 8 for example, tackle the idea that long booms endogenously sow the seeds of crises. in their framework, a long boom leads to excessive liquidity in the banking system, a reduction in interest rates and the entry of bad banks. eventually, the boom unravels because banks lose trust in one another and the interbank market freezes up. this model captures two important aspects highlighted by the empirical evidence of schularick and taylor ( 2012 ) : 9 crises tend to follow long booms and periods of low interest rates. the results are also consistent with the findings of hahm, shin and shin ( 2013 ) 10 and the mars paper by bonfim and kim ( 2013 ). 11 both show that financial crises are associated with a build - up of liquidity risk. the three papers we will see in the first session of the conference ( clerc et. al. ( 2013 ), 12 nguyen ( 2013 ) 13 and benes, kumhof and laxton ( 2013 ) 14 contribute to a literature that motivates financial imbalances and excessive risk - taking from over - optimism or from the implicit safety net guarantees for banks. in these models, too, the build - up of imbalances activates the kinds of adverse feedbacks between the financial sector and the real economy that we know can cause deep and prolonged downturns in activity. these studies are welcome first steps on the road towards