What affects the functioning of financial markets? This question was at the heart of the 21st Central Bank Conference on the Microstructure of Financial Markets hosted by the Deutsche Bundesbank at its Conference Centre in Eltville am Rhein.

Over two days, researchers, policymakers and practitioners explored a broad range of topics across financial markets – from global currency markets, collateral and funding markets to market transparency, safe assets and market resilience.

The discussions addressed questions such as:

• What drives volatility and trading conditions in foreign exchange markets?
• How do central clearing and collateral requirements affect funding markets?
• What are the limits of voluntary transparency, and how does information shape price discovery?
• How do dealers and market structures influence liquidity and resilience in safe asset markets?
• Can market fragmentation provide a cushion against exchange outages?

This year's keynote speaker Jean-Edouard Colliard, Professor of Finance at HEC Paris, reflected on the use of artificial intelligence and its impact on securities markets. 

The conference was organised by Falko Fecht (Deutsche Bundesbank), Stephan Jank (Deutsche Bundesbank), and Dagfinn Rime (BI Norwegian Business School).