intense competition on banks and other financial institutions, as a period of oligopoly ends: more rather than less innovation is needed to help share undi versifiable risks, with more attention to correlations between different risks. Charles Goodhart of the London School of Economics (LSE), while ques tioning the idea that volatility has increased, concludes that structural changes have made regulation more problematic and calls for improved information availability on derivatives transactions. In a thirteen country case study of the bond market turbulence of 1994, Bo rio and McCauley of the BIS pin the primary causes of the market decline on the market's own dynamics rather than on variations in market participants' apprehensions about economic fundamentals. Colm Kearney of the Univer sity of Western Sydney, after a six country study of volatility in economic and financial variables, concludes that more international collaboration in man aging financial volatility (other than in foreign exchange markets) is needed in Europe. Finally, Stokman and Vlaar of the Dutch central bank investigate the empirical evidence for the interaction between volatility and international transactions in real and financial assets for the Netherlands, concluding that such influence depends on the chosen volatility measure. The authors sug gest that there are no strong arguments for international restrictions to reduce volatility. INSTITUTIONAL ISSUES AND PRACTICES The six papers in Part C focus on what market participants are doing to manage risk.
Table of Contents
Editors' Introduction. A: Central Bank Perspectives. I. Volatility is Here to Stay - Some Thoughts on its Implications; M. Lusser. II. The Changing Structure of Financial Institutions and Markets: A Central Bank Perspective; A. Crockett. B: Volatility and Risk. III. Financial Innovations and the Incidence of Risk in the Financial System; M. Hellwig. IV. Has Financial Risk Really Worsened? C.A.E. Goodhart. V. The Anatomy of the Bond Market Turbulence of 1994; C.E.V. Borio, R. McCauley. V. The Anatomy of the Bond Market Turbulence of 1994; C.E.V. Borio, R. McCauley. VI. Volatility and Risk in Integrated Financial Systems: Measurement, Transmission and Policy Implications; C. Kearney. VII. Volatility, International Trade and Capital Flows; A.C.J. Stokman, P.J.G. Vlaar. C: Institutional Issues and Practices. VIII. Institutional Investors, Unstable Financial Markets and Monetary Policy; E.P. Davis. IX. Internal Organisation of Risk Control and Management in a Bank with Large International Operations; R.S. Gumerlock. X. Currency Exposure Management within Philips; A.E. Ronner, D.A.M. Trappeniers. XI. Measuring Value-at-Risk for Mortgage Backed Securities; S. Jakobsen. XII. Does the Paris Warrants Market Present a Systemic Risk?; B. Caillet, G. Gallais-Hamonno. XIII. Asset and Liability Management in Retail Banking; M.K. Lewis. D: Policy Implications. XIV. Is Central Bank Intervention Effective in Stabilizing Exchange Rates? A.A. Weber. XV. The Emerging Framework of Bank Regulation and Capital Control; J.S. Alworth, S. Bhattacharya. XVI. Monetary Policy and Liberalisation in Poland, Russia and the United Kingdom. E: The Marjolin Lecture. XVII. Central Banking and Market Volatility; R. Raymond.