Instead, the proper way to act is to strengthen the financial system and macroeconomic policies, in order to minimize their probability of occurrence and their consequences, and to set up a proper crisis-management strategy once they hit. As in the case of natural disasters, or accidents, the fact that crises will continue to happen does not mean that we must allow no regulation of economic activities (such as building codes, or driving standards). Countries with better building codes are better at facing earthquakes. In the case of financial crises, it is reasonable to improve regulatory mechanisms, particularly to allow financial innovation while keeping vulnerability at bay. Meanwhile, it is necessary to continue devoting efforts to the detection of early alerts, although unambiguous indicators are impossible to find. But there are symptoms of fragility, very common in emerging economies. High and persistent current-account deficits, misaligned exchange rates, currency mismatches in the financial and corporate sectors, excessive increases in the prices of assets and credit, all signal a potential problem, although they do not necessarily result in a crisis. Therefore, a look at the indicators is not enough; it is important to put them together to detect fragilities. This is precisely what we try to do in our financial stability reports, which allow us to gain an overall vision of vulnerabilities, although, once again, it does not provide a final verdict. Final remarks The world has gone through the worst crisis since the Great Depression.

This includes the increased pressure on financial institutions  BIS central bankers’ speeches  3  and regulators to have incentive systems, governance, accountability and controls to address the issues of over-emphasis on short term performance, reckless risk-taking and the pervasive conflict of interests. In tandem with this, is the stronger focus to spur consumer activism as a means to encourage more responsible and sustainable business practices. It is in this area that financial institutions can have an important role in creating positive conduct and behaviours among financial participants in the industry, as well as contributing towards uplifting the state of financial education and consumer awareness. Third, is the strengthening of boards’ effectiveness and accountability, and sound governance of financial institutions. Following the crisis, i.e. the global financial crisis, corporate governance practices in the financial industry have come under significant scrutiny. There have been increased expectations on the management, boards of financial institutions and on regulators to significantly improve governance practices, particularly in the area of risk management policies and procedures. At the international level, substantial enhancements have been made to standards on corporate governance. The growing expansion of ASEAN banks in the region, must therefore be accompanied by an increased emphasis for the boards and senior management of financial institutions to provide the leadership and oversight of group-wide risks arising from cross-border operations. Greater diversity of boards to appreciate cultural nuances and competitive dynamics in different markets will hence be key to support sustainable cross-border operations of the institutions.