Chapter 1: Introduction
Since the 1980s, financial systems in developing and developed countries have been evolving with enormous speed. Most restrictions on the financial system have been lifted. Many potentially restrictive laws have been interpreted for the benefit of financial markets. Financial integration reached unprecedented levels. Many new financial techniques and products were developed. Major financial markets have experienced a transformation into a much more complex, more opaque and bigger system. In industrialized countries especially, financial systems are no longer based on the loan-deposit nexus dominated by deposit institutions. During this period, central banking in many countries underwent several important changes too. Before the 1980s, central banks used to utilize various direct and indirect tools with the help of a relatively firm regulatory framework.