Speech

Governor Randall S. Kroszner

At the Risk Minds Conference, International Center for Business Information, Geneva, Switzerland

December 8, 2008



Assessing the Potential for Instability in Financial Markets



Good morning. I am honored to give the opening remarks at this impressive conference. Today, I would like to offer some thoughts about risks in financial markets and the manner in which banking organizations need to assess those risks.1 In particular, I will note the problems that can arise when the safeguards that market participants employ for their individual positions can have the unintended effect of actually exacerbating market-wide distress and amplifying losses among multiple market participants during times of market turbulence. But before offering recommendations that might serve to address these problems for banking institutions, I believe it is worthwhile to take a step back and explore some conceptual issues about the organization of markets.



Full speech here.