cleared markets face. on the other hand, some consequences of central clearing may increase systemic risk : • as a result of growing risk concentration in ccps and in a limited number of large global dealers, which act as general clearing members as a gateway for other financial institutions to ccps, • as a consequence of mutualisation, risks may spread among participants and markets more widely and the distribution of losses is more difficult to predict, • in order to avoid mandatory clearing, we might see migration of risk outside of the regulated universe through the artificial creation of bespoke ( and hence risky ) products that are not suitable for central clearing. moreover, the systemic effect of clearing depends on whether risk is redistributed to those who are more able to deal with it, which is difficult to determine. finally, the overall systemic effect depends on the incentives for risk - taking and central clearing that accompany risk redistribution. [ slide 5 ] to promote central clearing and avoid regulatory arbitrage, a number of reforms have been adopted including : ( i ) mandatory clearing, ( ii ) margin requirements for non - centrally cleared trades, and ( iii ) higher capital requirements for non - centrally cleared trades. this highlights the crucial complementarity between the regulation of banks and the regulation of financial market infrastructures ( fmis ), with the overall objective that regulation reduces overall risk, and does not shift it around the financial system. 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

see today is a globalisation process that has triggered a trend towards global clearing with increasingly large global ccps. moreover, it appears that many banks prefer indirect access to clearing services so as to comply with the clearing obligation. client clearing seems thus to be dominated by a few large global intermediaries. this concentration creates a higher degree of dependency on this small group of firms. the trend towards the globalisation of clearing has benefits and risks. on the one hand, there is greater scope for netting that allows for collateral savings, the lower cost of direct access and using ccps, and an increase in transparency for both regulators and ccps. on the other hand, there is a potential for systemic risks as ccps may become too big to fail. also, market power may push up clearing fees and restrict entry. this could create disincentives for central clearing and could undermine the efficiency gains reaped in the first place by eroding the pricing power of global dealers. there could also be cross - border regulatory frictions in the case of multiple ( and inconsistent ) national regulations, and last but not least the cross - border liquidity provision in several currencies becomes more complex. this leads me to the last and maybe most challenging “ unknown ”. given ccps ’ role as financial market utilities that has been reinforced by mandatory clearing requirements, and their increasing systemic relevance, would the world be a safer place, if ccps had been established as non - for - profit institutions? my tentative answer is no. i have outlined the importance of good risk management in ccps, and the ability to adapt to a changing market environment in terms of counterparties, products, and technologies. i am convinced that this will be better done in a market environment. but this certainly requires strong supervision, effective cooperative oversight arrangements, and setting up the right incentive structure so that ccps don ’ t lose sight of public interest, starting with the interest of their indirect members. let me conclude. central clearing will make the global financial system safer. however, it also has the potential to redistribute risk. its overall systemic effect will thus depend on the incentives for risk - taking and central clearing that accompany risk redistribution. hence the need for the official sector to provide the right incentive framework ex - ante, produce data that can help understand the distribution of risk, and tightly supervise ccps in a spirit of cooperation across jurisdictions. thank you for your attention. bis central bankers ’ speeches