The differences in the interest rate affect the currency flows which, in turn, puts pressure on the exchange rate. In Sweden, for 20 years, we have had free capital movements, a variable exchange rate and an independent monetary policy aimed at meeting the inflation target. However, recent years’ experiences have shown that it can be difficult to conduct an independent monetary policy when capital movements are free, even with a variable exchange rate. The exchange rate has not always acted as the stabilising factor that many economists have counted on. One example of this is the ECB’s highly expansionary monetary policy from the start of 2015, which risked entailing an excessively rapid appreciation of the krona. One hypothesis put forth is that monetary policy’s trilemma may, in fact, be a dilemma: It is not possible to fully unite an independent monetary policy with free capital movements. New studies based in what is usually known as the financial cycle provide a certain amount of support for this. 15 No widely-accepted definition of the financial cycle exists, but, as a rule, it is usually constructed on the basis of time series of various financial variables such as indebtedness, asset prices and so on. What distinguishes this cycle is that it lasts for longer and fluctuates more than a normal economic cycle. According to the new studies, there exists a global financial cycle that is mainly steered by monetary policy in the United States. For smaller economies, it can be difficult to deviate from this global cycle in practice.

While the financial sector has, over the years, strengthened its risk management and control functions to combat financial crimes, a higher degree of emphasis and attention by senior management and the Board, on issues relating to AML/CFT, can further improve the standards of compliance and the effectiveness of measures put in place to fight against money laundering and terrorist financing. We also observed that financial institutions exhibiting effective defences against financial crimes shared four common attributes in their AML/CFT framework. These are: (i) well developed and clearly articulated policies and procedures; (ii) effective governance structure, particularly on the compliance function; (iii) incorporation of AML/CFT compliance assessments in the audit and capacity development programmes; and (iv) increased and effective use of information technology and management information systems for AML/CFT risk monitoring and management. therefore, talent development in this area is becoming increasingly critical. A well trained workforce is a valuable asset that would contribute to the implementation of an effective compliance framework with impactful results. This can be achieved through the formulation  2  BIS central bankers’ speeches  of structured and coordinated capacity development programmes aimed at elevating the level of technical skills, leadership and professionalism. On this note, Bank Negara Malaysia lauds the initiative by the financial sector in formulating the AML/CFT Certification Programme for compliance officers that will be launched during this conference. This conference and indeed the theme “Raising the Bar in Compliance and Enforcement” is very timely and relevant.