There should be better ways of making financial globalisation work, while guarding against its darkest consequences – to achieve robustness without fragility. But this may require new tools and approaches, operating system-wide. It may even require a new architecture, strong enough to withstand the new scale and scope of systemic risks. Let me discuss four areas where progress could realistically be made in developing this new architecture: financial surveillance; debt structures; macro-prudential policies; and multilateral financing. Each would be an important new brick in the wall. 6  BIS central bankers’ speeches  (a)  Improvements to global financial surveillance  Forewarned is forearmed. Understanding the dynamics of the international monetary system, its tipping points and edges, is a pre-requisite for effective management. Some progress has been made on this front. For example, the IMF’s Global Financial Stability Report has, since 2002, sought to plot the evolving contours of global finance. And the publication by the IMF of “Spillover Reports”, since 2011, is a further step in the right direction. Nonetheless, these steps only take us so far. The centrepiece of the IMF’s surveillance efforts remain the country-specific Article IV consultations. Whether that country-specific focus, enshrined in the IMF’s 1944 Articles, can be justified in today’s highly integrated global financial network is a more open question. This year’s IMF Triennial Surveillance Review may be an opportunity to tilt the balance further towards multilateral surveillance. What more might be feasible? I have a dream. It is futuristic, but realistic.

Without them, it would have been impossible to make sense of the chaotic dynamics of global economies and financial systems at the time. In other words, nothing could have provided a better case study of the importance of Max’s work than the crisis. And it is lessons from the global financial crisis with which I want to begin. These are of course many and varied. But among the most important is also perhaps the simplest: to safeguard against systemic risk, the financial system needs to be managed as a system (Haldane (2009)). As put, this statement seems rather obvious, perhaps even tautological. Yet, pre-crisis, it was far from obvious. The orthodoxy then was that safeguarding individual financial firms was a necessary and sufficient condition for system-wide stability. This was the financial stability equivalent of the English aphorism: “look after the pennies and the pounds will look after themselves”. And so it appeared during the long pre-crisis period of stable growth and stable banks – the “Great Moderation” (Bernanke (2004)). The crisis has rewritten that orthodoxy. It revealed that the safety of individual banks was neither a necessary nor sufficient condition for systemic stability. Not necessary because, in any well-functioning system, individual banks can and should fail. Not sufficient because, in an integrated web, the chain is only as strong as its weakest link. In focussing on individual banks, policymakers had been, to coin another English aphorism, “penny-wise but pound-foolish”. That is why Great Moderation gave way to Great Recession (Gai and Kapadia (2010)).