Going forward to a time when all this global financial crisis is resolved, it may also be appropriate to revisit and rethink the standard financial regulatory framework, particularly in emerging and even in a more developed part of the world. Given the magnitude of market adjustment, volatility and contagion across markets, risk diversification is easier said than done. This is especially true as markets and institutions seem to correlate highly in a crisis situation as risk-aversion intensified. The current financial climate, therefore, highlights the importance of supervisory coordination. This coordination should include both domestic and cross-border dimensions and encompass key regulators and central banks. This is for the benefit of information sharing and elimination of regulatory arbitrage, which has been one of the fundamental causes of this crisis. Given increasing financial integration, and growing complexity of financial instrument, market, counterparty links, and changing demarcation line between different financial institutions and financial players, we have witnessed emergence of the new channels and process of spread of systemic risk, through broader groups of players – banks, investment banks, insurance companies, and non-banks – all of whom are regulated under different framework, or not even regulated. Because of this, there is a pressing need to rethink the regulatory framework in order to be in keeping with this new paradigm. 2  BIS Review 141/2008  Ladies and Gentlemen, It has been said that this crisis will soon lead to major changes in the geopolitical world order.

We have Professor Dani Rodrik of Harvard University as our keynote speaker on the topic of “The Disappointments of Financial Globalization”, followed by five leading international researchers, namely Dr. Claes Berg, Sveriges Riksbank; Professor Raghuram Rajan, University of Chicago; Professor Jose Antonio Ocampo, Columbia University; Dr. Arvind Subramanian, the Peterson Institute for International Economics; and Dr. Robert McCauley, Bank for International Settlements who will be presenting their in-depth studies over the next two days on broad range of issues, a part of which I have barely begun to touch upon. This symposium will also be rounded up by a panel discussion on “Financial Globalization in Emerging Market Economies” which should provide an interesting discussion on the implication of financial globalization and the current financial crisis from an emerging market perspective. Ladies and Gentlemen, I would like to conclude by saying that the recent developments in financial markets around the world will stimulate considerable review and analysis in the months and years to come. Across the globe, legislatures, regulators, financial supervisors are already hard at work trying to distill the lessons to be drawn from this experience and their implications for future policies. For the private sector, banks, credit-rating agencies, and the investment community are also trying their best in coping and adapting to these developments. For central banks, the implementation of monetary policy will certainly become a more challenging task as a result of the current financial turmoil.