slive, c. wilkins and j. witmer, “ access to central clearing services for over - the - counter derivatives, ” bank of canada financial system review ( june 2011 ) : 39 – 45. bis central bankers ’ speeches the financial system in several advanced economies. since the crisis, it has not been subject to the same degree of regulatory reform as the traditional banking system. that is now changing. this is why regulatory authorities in canada, including the bank of canada, are actively involved, both at the fsb table and here in canada, in assessing market - based financing activities and helping to develop new financial regulations and market infrastructure, such as central clearing services, that will reinforce the safety and efficiency of our financial system. more broadly, with the international financial system still facing serious risks, it is crucial that we maintain the momentum of reform. thank you. bis central bankers ’ speeches

. maturing paper was not rolled over as investors became more aware of, and concerned with, the potential risks, especially the uncertainty surrounding the willingness and the capacity of the sponsors to provide a liquidity backstop. a second vulnerability is counterparty credit risk arising from the interconnected nature of the mbf sector. mbf investors are exposed to credit risk, both from their direct counterparties but also, more generally, from their counterparties ’ counterparties, and so on. the network of bis central bankers ’ speeches obligations that arises from mbf activities thus requires an investor to be aware of the creditworthiness of its direct counterparty, including risks that could arise from how that counterparty is connected to the rest of the financial system. during a crisis, however, the difficulty of properly assessing one ’ s exposure to this complex network and the resulting uncertainty may cause or amplify a financial panic as risk aversion increases. a third vulnerability is related to the opacity of some of the securitized assets being used as collateral in secured borrowing. during the recent crisis, this type of collateral became more illiquid and difficult to evaluate. this opacity may also impede the transfer of credit risk. finally, there is a vulnerability associated with the build - up of leverage that can take place in mbf activities, which can be exacerbated by the lower level of regulation. the build - up of leverage embedded in very complex financial products, followed by forced deleveraging, played a crucial role during the crisis. reforming the shadow banking sector while we have a much better understanding of the mbf sector today than we did before the crisis, we still have much to learn. the fsb has created a task force to study shadow banking. 2 it is currently assembling information and developing a methodology to systematically monitor the sector and to explore possible regulatory measures. broadly speaking, there are four types of responses that policy - makers can consider : first, indirectly regulating mbf activities by regulating the banks ’ involvement in them ; second, directly regulating entities that are active in mbf and that pose systemic risk concerns or create opportunities for regulatory arbitrage ; third, focusing on instruments and activities that potentially create risk in the financial system, rather than on entities ; and, fourth, enacting a range of macroprudential measures, such as those that would reduce procyclicality and strengthen market infrastructure. three points merit emphasis. first, it