overseers and supervisory authorities. the main objective of all these principles and responsibilities is to create a more secure and efficient structure for authorities of fmis that also includes payment systems. in this regard, i think that all authorities related to payment systems will do their utmost to achieve harmonization of these systems and apply the said principles in the near future. further international studies carried out in this field will focus on the implementation of these 24 principles. distinguished participants, cross - border connections of payment systems progressively gain importance in line with the increase in the volume of foreign trade. in the meantime, studies geared towards developing the international payment systems continue all around the world. i think this conference will significantly contribute to these studies and i very much hope that it will be a useful and fruitful conference. i would like to thank you all for listening. bis central bankers ’ speeches

was triggered by problems in the sub - prime loans of the u. s. mortgage market, the origins of this turmoil can be traced to earlier developments. in the four - year period to mid - 2007, the world economy had been characterized by exceptionally benign macroeconomic and financial conditions, as indicated by strong growth and low levels of inflation and ( long - term ) interest rates. such conditions of “ low volatility ” fostered a “ search for yield ”, a rise in leverage to increase returns further, and an underpricing of risk in some key asset markets. these developments were supported by – and, in turn, they encouraged – further financial innovation, as evidenced by the rapid growth in securitization of bank loans, in credit risk transfer instruments and in other complex structured finance products. rapid financial innovation over the last 30 years has undoubtedly benefited the world economy by allowing a deepening of capital markets, easier access to credit by households and enterprises, and a more effective utilization of resources. however, especially in recent years, financial innovation has also been associated with structural weaknesses and complacency in risk management. for instance, the low transparency of these complex products may have made it easier for investors to underestimate the risks they take on. in addition, with prudential regulation sometimes lagging behind financial innovation, some institutions may not have been sufficiently transparent about their exposures to complex structured finance products, on and off their balance sheets. moreover, as such products were often difficult to value owing to inadequate information about the underlying assets, investors often relied too heavily on credit rating agencies. however, the methodology used by the credit rating agencies was not transparent, failing to identify the risk characteristics of the complex structured finance products, including their illiquidity. it is also well known that it was the distorted incentives in the “ originate - and - distribute ” business model of financial institutions that led to a decline in credit standards, the root cause of the “ sub - prime ” problem. more generally, the extent of leverage taken on by banks, bond insurers, hedge funds, and other financial institutions was probably not adequately appreciated, nor were the risks of a disorderly unwinding. eventually something was bound to happen that would trigger a widespread reappraisal of risk, resulting in re - intermediation and de - leveraging. this turned out to be the escalating losses on us sub - prime loans, which showed up in certain hedge funds