Fabio Panetta: Joining forces - stepping up coordination on risks in central clearing

Introductory remarks by Mr Fabio Panetta, Member of the Executive Board of the European Central Bank, at the Second Joint Bundesbank/European Central Bank/Federal Reserve Bank of Chicago Conference on CCP Risk Management, Frankfurt am Main, 26 February 2020.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Introduction

I am pleased to welcome you to the second conference on central counterparty (CCP) risk management organised by the ECB together with the Deutsche Bundesbank and the Federal Reserve Bank of Chicago. We are pleased that such a wide range of public and private sector stakeholders have joined us today to discuss the key risk management challenges in central clearing.

Considering the increased concentration of financial risk in CCPs, this is clearly an important issue. Since the 2009 G20 agreement to introduce mandatory central clearing obligations for over-the-counter (OTC) derivatives, we have observed strong growth in central clearing in these markets, in particular for interest rate swaps (IRS) and credit default swaps (CDS). Compared with 2009, when only around 10% of CDS and 37% of IRS were centrally cleared, these figures now stand at more than 50% for CDS and almost 80% for IRS.

The decision to launch mandatory central clearing was coupled with the premise that increased risk concentration in CCPs must be accompanied by stringent safeguards. And indeed, global standard-setting bodies have worked hard to further enhance the resilience, recovery and resolvability of CCPs.