**Table 3: The Implementation Plan of Selected Financial Sector Strategies**

|**Country**|**Relevant Extract from the Financial Sector Strategy**|
|---|---|
|**Georgia**<br>**(2006)**|In order to effectively implement the strategy worked out and presented by NBG [National Bank<br>of Georgia], the policy of transparent functioning of the banking system and optimal<br>management of information flow should be carried out. NBG considers close cooperation with<br>international financial institutions as [a] priority for successful implementation of the presented<br>strategy. In this respect, active cooperation shall be continued with the International Monetary<br>Fund, World Bank, European Bank for Reconstruction and Development, Organisation for<br>Economic Co-operation and Development, as well as representatives of other international<br>organizations and experts.|
|**Pakistan**<br>**(2009)**|The Banking Sector Strategy (BSS) is centered on reforms involving the State Bank of Pakistan<br>(SBP) and the banking sector, which constitutes not only the core of the financial system in<br>Pakistan but is also central to the monetary and financial stability responsibilities of the SBP.<br>The BSS focuses on reforms that the SBP has the power and resources to implement or<br>substantially influence....But the Banking Sector Strategy (BSS) will also involve departments<br>and agencies of the Government of Pakistan (GOP), the Securities and Exchange Commission of<br>Pakistan(SECP)and ultimatelyall other stakeholders in the financial sector.|
||After the principles stipulated in the FSMII have been approved, to ensure that implementation<br>would meet its objectives, the FSMP Phase II Implementation Committee, chaired by the<br>Minister of Finance, would be formed. The Committee would be responsible for the overall<br>implementation of the FSMP Phase II. Moreover, the Committee would form 4 sub-committee[s]<br>to oversee implementation of the Action Plan in various areas including tax, legal, data and|
|**Thailand**<br>**(2009)**|human resource development. Meanwhile, the Financial Institutions Policy Committee would<br>oversee implementation of policies on competition and financial access....All related agencies<br>and Committees would coordinate and work together to determine an implementation time-table.<br>In this regard, the BOT [Bank of Thailand] would be in charge of policies to reduce regulatory<br>cost, NPL and NPA [nonperforming loans and assets] resolution, and enhancement of financial<br>infrastructure to facilitate strengthened risk management and information technology capacity<br>and utilization.|

_Source:_ Authors’ review of selected national financial sector strategies.

Strategies are relatively clear about the _process_ for implementing the strategy—outlining which institutions are responsible for coordinating the strategy (Pakistan) and the coordinating mechanism that will be used for its implementation (Georgia). Also, the subsequent allocation of specific responsibilities under the umbrella coordination mechanism tends to be embedded in the implementation process, including the management of risk (Thailand). In almost all cases, the central bank was assigned the responsibility for managing systemic risk in the financial sector.

# **_2.4. Communicating the trade-off between financial development and systemic risk_**

Determining if a given financial sector strategy has adequately considered and communicated trade-offs between the speed of financial development and the degree of systemic risk associated with it—or, for that matter, gauging whether the strategy involves plans to address the trade-off—is challenging, but not impossible. To that end, we examined the strategies to see whether risk and return in development had been explicitly weighed. We noted whether strategies referred to the expectation that the

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