Given the cross-border nature of illicit financial activities, it is not enough that we have strong regulation and supervision in  BIS central bankers’ speeches  5  Singapore; we must be able to co-operate effectively with supervisory authorities and enforcement agencies abroad. Singapore contributes actively to the work of the FATF, the Global Forum on Transparency and Exchange of Information for Tax Purposes, and the AML/CFT Expert Group under the Basel Committee, to shape well-balanced international standards that are effective and proportionate. MAS co-operates with our international counterparts, through sharing inspection reports, participating in supervisory colleges, and facilitating home regulator visits. We also co-operate with home supervisors to enhance AML/CFT controls and standards not only at the branch but at the group level for financial institutions operating across borders. Internationally, the new emphasis is on co-operation in pursuing cross-border tax offences. Singapore has endorsed the internationally-agreed standard, known as Article 26 of the OECD Model Tax Convention on Income and Capital, for the exchange of information upon request, and is committed to supporting the effective implementation of this global standard. Singapore amended legislation in 2009 to lend effect to its obligations and has since signed 30 Avoidance of Double Taxation Agreements incorporating the new standard. This ensures that we are able to assist in foreign requests for information on a person’s tax position, so long as the request is clear, specific, relevant and backed with good reason. Some people think that Singapore’s banking confidentiality regime fetters such international cooperation.

And this is not primarily the result of an unusually long slowdown, as many have claimed. The preceding boom was also unusually long. Furthermore, we knew that there were large risks associated with the fiscal policies conducted in the initial years of the Monetary Union. The discussions on fiscal policy were occasionally rather acrimonious in the EFC, for example. Several of us gave clear warnings regarding the fiscal policies pursued by, for instance, France and Germany at the time. The Stability and Growth Pact obviously did not serve as the deterrent it was supposed to be, at least not sufficiently. Nor did EMU - so far anyway - contribute as much as we had hoped to making the European economy more efficient. Perhaps there are a few exceptions here related to the financial sector and the financial markets. It is my intention in this introductory remark to focus on some suggestions for the future. In doing this, I will talk about macroeconomic issues, rather than dealing with the severe structural challenges Europe is confronted with. However, before doing this let me make a general comment. In the present debate some conclude that the current policy framework should be relaxed, which is normally expressed as saying it should become more flexible. I have difficulty understanding this view. On the contrary, I think the developments in recent years have strengthened the arguments in favour of a regulatory framework. From the start there were concerns about “free riders”. These concerns were confirmed sooner than expected.