Sixteen years ago, the so-called “Group of Thirty” – a committee of leading financiers and former regulators – issued a landmark report on the implications of derivatives and other complex forms of finance for the stability of the banking world. It pointed out that complex finance had revolutionised the banking world – but in a manner that could be beneficial if these new instruments were handled with sound risk management practices and models.
“Derivatives have fundamentally changed financial management by providing new tools to manage risk,” the report declared. “For derivatives activity to grow and prosper, those who take part in it should continue laying a strong foundation of good management practice.”
