What should drive this debate is market participants’ need for information to make sound and secure credit and investment decisions, rather than the concerns some have about what was once considered secret. Transparency promotes confidence, and in light of the increasingly international nature of markets, we must ensure that disclosure in different countries is sufficient and broadly consistent to promote greater financial stability across markets. That will no doubt require additional harmonization of accounting standards so that supervisors, bankers, and other market participants alike can better understand and act appropriately to manage their exposures to markets or institutions abroad. Managing international financial crises Our efforts to promote stronger banks through changes in the capital accord, while crucially important, also need to be seen in their broader context. The capital accord is part of a broader series of initiatives to promote stronger financial systems globally, and more generally to reduce the likelihood of future financial crises. During the latter part of the 1990s the international financial system has endured perhaps its greatest stress in the post-war period, and currently, we again are seeing signs of strain associated with the global slowdown in growth. The experience of recent years has reinforced old lessons and brought home new insights about maintaining financial stability and sustained growth. In particular, a broad consensus has developed on ways of strengthening the institutional framework at the national and international level to create more robust, and thus more crisis-resistant, economies.

William J McDonough: The role of financial stability An address by Mr William J McDonough, President and Chief Executive Officer of the Federal Reserve Bank of New York and Chairman of the Basel Committee on Banking Supervision, at the XIII International Frankfurt Banking Evening, Frankfurt, Germany, 3 May 2001. *  *  *  Mayor Roth, President Duisenberg, and distinguished guests… It is an honor to address the thirteenth International Frankfurt Banking Evening in a setting so rich in history and tradition. I have been told that this stately building is more than just the busy town hall for a major European city, it is also an ever-present witness to culture and history, having hosted banquets and celebrations for almost six hundred years honoring coronations and the visits of Presidents and Prime Ministers. Indeed, it seems highly appropriate that our dinner this evening, which recognizes the importance of banking and finance to this distinguished city’s heritage, is being held here, so close to one of Europe’s most historic marketplaces. Since medieval times, merchants have traveled great distances to participate in Frankfurt’s many fairs and markets. The wealth that those markets produced no doubt assisted in the development of increasingly sophisticated financial institutions and a stock market as early as the 16th century, plus several of the most storied banking houses in history. Those institutions, in turn, contributed to Frankfurt’s ascent to prominence by financing additional trade and commerce here and abroad.