settlement process for triparty repo agreements, including through continued reductions in the amount of intraday credit provided by the clearing banks. but even when we accomplish these reforms, more work will remain to reduce systemic risk in the short - term wholesale funding markets that shadow banking relies on. a major source of unaddressed risk emanates from the large volume of short - term securities financing transactions ( sfts ) – repos, reverse repos, securities borrowing and lending transactions, and margin loans – engaged in by broker - dealers, money market funds, hedge funds, and other shadow banks. regulatory reform mostly passed over these transactions, i suspect, because sfts appear safe from a microprudential perspective. but sfts, particularly large matched books of sfts, create sizable macroprudential risks, including large negative financial stability board ( 2011 ), key attributes of effective resolution regimes for financial institutions ( pdf ) ( washington, d. c. : financial stability board, october ). bis central bankers ’ speeches externalities from dealer defaults and from asset fire sales. the existing bank and brokerdealer regulatory regimes have not been designed to materially mitigate these systemic risks. the global regulatory community should focus significant amounts of energy, now, to attack this problem. the perfect solution may not yet be clear but possible options are evident : raising bank and broker - dealer capital or liquidity requirements on sfts, or imposing minimum margin requirements on some or all sfts. i ’ ll stop there, and i look forward to the discussion. bis central bankers ’ speeches

number of cfa charter holders and expects the numbers to grow as more and more sbp officers pursue cfa certification. ladies and gentlemen, let me now shed some light on why it is necessary for all of us to equip ourselves with advance knowledge and tools proactively. the global financial crises ( gfc ) has aptly demonstrated the havoc that can be caused when profit taking motive combines with lack of transparency and disclosure standards, inadequate awareness of sophisticated financial products, optimistic expectations about asset pricing and lax regulatory standards. the global financial crisis forced the regulatory attention towards containing systemic risk and ensuring financial stability through strong capital and liquidity standards ( such as basel iii ), more stringent regulations, and introduction of macro prudential policy toolkit. financial stability demands timely identification of systemic vulnerabilities along with mitigating measures to limit page 2 of 5 the spillovers and keep the public confidence intact. appreciably, cfa institute has updated its curriculum to address the key lessons learnt from the global crisis. ladies and gentlemen ; not surprisingly, ensuring financial stability has now become the number one priority of many of the central banks around the world. sbp is also playing a pivotal role in ensuring stability of the financial sector in pakistan. in line with its vision 2020 ’ s focus on strengthening the financial stability regime in pakistan, sbp has established a separate financial stability department ( fsd ). an executive level financial stability executive committee ( fsec ) has also been constituted within sbp which is entrusted with the responsibility of discussing and monitoring financial stability issues. further, sbp and secp have formed a council of regulators, which will act as a forum for deliberating issues related to systemic risk, particularly those having cross market stability implications. work is also underway to form a national level financial stability council ( nfsc ) involving other stake holders such as ministry of finance. it is no secret that developed financial institutions act as a catalyst for enhancing financial intermediation, reduce information asymmetries and allow central banks to implement and achieve policy objectives. monetary policy is, generally, implemented through money and foreign exchange markets where financial institutions, particularly the banks, play a pivotal role. if financial institutions are fairly mature, markets are efficient and there is low uncertainty, the effectiveness of monetary policy increases as the monetary signals are smoothly transmitted to the entire spectrum of the yield curve. sbp, through its various policies and initiatives, has been endeavoring to create an enabling environment for the