There is also an extensive exchange of information with the supervisors in the Banking Insurance and Securities Commission. Twice a year, Norges Bank publishes its financial stability report where the risks to the present and future solvency of financial institutions in Norway are assessed. The aim is to detect the first signs of banking problems more quickly and possibly prevent them from escalating into a crisis. However, the financial system is evolving rapidly. Tomorrow’s problems could easily be different from the past. Today, a large part of our banking industry is part of Nordic banking groups. This raises the question of whether a model for crisis resolution only based on national considerations would work. In light of this challenge, Nordic central banks have issued a memorandum of understanding setting out principles for the establishment of a structure for crisis management and the handling of information if a pan-Nordic bank should have problems. Nevertheless, the emergence of multinational banking groups raises the question of whether some banks may be “too big to save”. Another difference from the early 1990s is the government’s one-third ownership in the largest bank. In terms of crisis resolution, this is most probably a further complication. Banking crises have occurred at irregular intervals as long as banks have existed. And it could happen again. We need to be vigilant and alert in our macro prudential supervision, and willing to consider new approaches in crisis resolution to lessen the impact of any new financial crisis. Thank you for your attention.

This is worrying, because misconduct erodes trust in the system. If investors, depositors and policy holders stop believing that their interests are being safeguarded, the entire system quickly comes unraveled at significant costs to society. These costs can arise from failures of financial institutions, a misallocation of economic resources, or simply steep fines that destroy shareholder value and employment prospects for affected workers. Since the global financial crisis, banks have paid more than USD320 billion in fines and legal costs and have been the subject of numerous Government financial inquiries due to misconduct. In Malaysia, in the last 5 years, Bank Negara Malaysia has imposed fines on financial services providers to the tune of RM116 million. A survey conducted by the Bank revealed that almost twothirds of reported losses by banks in 2016 were associated with internal fraud, regulatory noncompliance and operational lapses. We have examined these incidents in some depth. Our observations lead us to conclude that behaviour is very much influenced bycontextual factors such as organisational values, incentives and management responses to misconduct or non-compliance. The rightcontextual setting can exert a powerful influence on individual behaviour. We believe this begins with setting and clearly communicating expectations of desired behaviour. Without clarity on what is acceptable in the first place, it would not be possible to encourage, much less enforce, these expectations. The FSPB serves an important role in this regard through its work in defining and developing codes of behaviour for financial institutions.