These are to be welcomed, provided the overall level of resilience is maintained. Resisting Fragmentation There are, however, other nascent risks that, if left unchecked, could threaten the progress made, and, ultimately undermine the G20’s objective for strong, sustainable and balanced growth. These risks include the impact of reform fatigue on implementation momentum, the outcome of Brexit negotiations, the need to complete Basel III, and the importance of finishing the job of ending too big to fail. In many respects, the global financial system is at a fork in the road. On one path, trust and cooperation diminishes, fragmentation hardens, capital flows are disrupted, and trade and innovation are curtailed. If authorities do not have sufficient confidence that their efforts to promote financial stability are being reciprocated elsewhere, then concerns about the risks of openness could intensify. If that happens, domestic authorities could impose local requirements on domestic entities of foreign firms. In a world where many banks and FMIs are highly interconnected that would generate significant inefficiencies, frustrating the benefits that flow from open trade and investment. Taking this low road would be sub-optimal for all, with fewer jobs, lower growth and higher domestic risks. 10  One example is a report by the Committee on the Global Financial System on the resilience of global repo markets that is being delivered to the G20 this week. 8  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  8  But there is another path: the high road.

This will provide more clarity on the respective roles of the various agencies – as well as MAS’ own approach to investigating misconduct. Where laws are broken, the MAS will rigorously investigate a case including with the Commercial Affairs Department (“CAD”), and will not hesitate to charge the perpetrators involved. We also supervise regulated financial institutions on a regular basis and will take enforcement actions against an institution that has fallen short of our regulatory requirements. But enforcement actions cannot operate in isolation. No amount of rules can stop someone who is intent on gaming the system or breaking the law. Our capital market works best in a regime where all stakeholders share some responsibility in holding the line against any mismanagement or misconduct, analogous to community policing. The statutory and market regulators can work closely with the industry, investors, industry associations and other groups to co-create a fair and orderly capital market. This will engender confidence and trust, and allow market discipline to thrive. This brings me to the important role of market discipline. As our capital markets develop, we can and should expect market discipline to increasingly feature. It is the process by which market participants themselves exercise oversight over companies and call out what may be possible transgressions or dubious practices. The fact that we have indeed seen more of such commentaries and reports in recent years need not be interpreted as a sign of weakness but of strength arising from a more mature capital marketplace.