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Second Annual Survey of Market Practitioners:
Questionnaire and Survey Results - Part One
Note: All responses given in percentages (%)
Overview
| With the creation of the Euro, foreign exchange (FX) activity diminished for the first time between April 1998 and April 2001, from an average daily turnover of $1,490 billion to $1,210 billion. |
- Will concerns with terrorism and geopolitical risk slow down financial globalization?
22
Yes for all markets 23
Yes for emerging markets 18
Only for very specific markets 37
No - Do you believe that the global financial system has now developed the instruments and systems such as CLS (see box) to keep currency risks under control?
40
Yes 60
No - Or are capital markets still highly vulnerable to mainly one of the following threats?
13
Major misalignment between the key currencies (dollar, euro, yen, pound) 27
Mismanagement and abrupt movements of second-tier currencies (Latin America, East Asia) 5
Failure of the euro 20
Disruptive speculation of major proportions by hedge funds and others 2
Breakdown in the pipelines for FX movements 33
Extreme volatility - Do you think the implementation of a “Tobin tax” on FX transactions would:
5
Protect the "real economy" from financial speculation 45
Disrupt the efficiency of capital markets and penalize the real economy 50
Be easily circumvented anyway - Altogether, compared to one year ago, would you say that the risk of a major global financial crisis has:
42
Increased 42
Remained the same 16
Decreased
| In 1995, a group of major FX trading banks (G20) developed Continuous Linked Settlement (CLS) as a solution to the problem of FX settlement risk. A "payment-versus-payment" scheme will be implemented in the second half of 2002 for all FX transactions of members. |
Part A: The risks for capital markets
1. Crises and wealth destruction
In the near future (next three years) how vulnerable are capital markets to the risk of another:
- "September 11" type of disruption in physical/human market systems
13
Extremely vulnerable 58
Vulnerable 27
Less than before 2
Not at all - "Barings" type of operational malfunctioning
17
Extremely vulnerable 61
Vulnerable 20
Less than before 2
Not at all - Argentinean ("peg-to-dollar" and debt overhang) type of crisis
10
Extremely vulnerable 61
Vulnerable 27
Less than before 2
Not at all - Asian/Japanese type of "bad-loan crisis"
19
Extremely vulnerable 56
Vulnerable 25
Less than before 0
Not at all - "Enron" type of opacity and bankruptcy
36
Extremely vulnerable 56
Vulnerable 7
Less than before 1
Not at all - "e-bubble" type of speculative burst
5
Extremely vulnerable 41
Vulnerable 48
Less than before 6
Not at all
2. Barriers to cross-border capital flows: impact on risks?
-
Between major financial markets, the biggest barrier to cross-border activities are differences in:
8
Technology and market infrastructures 13
Financial information standards 25
Regulation of markets and institutional investors 23
Tax systems 27
Market cultures and procedures 4
Other - To access emerging markets, the key obstacle is:
2
The same as for major financial markets 31
Lack of liquidity 16
Local regulation on foreign investment 34
Insufficient quality of financial information 11
Other 7
Not relevant for my activity
Continue to Questionnaire and Survey Results - Part Two.
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