Christian Noyer: The G20 and the role of emerging markets in the new financial architecture Opening speech by Mr Christian Noyer, Governor of the Bank of France, of the Session “The G20 and the role of emerging markets in the new financial architecture”, at the Money and banking conference 2009, Central Bank of Argentina, Buenos Aires, 31 August-1 September 2009. *  *  *  I am delighted to introduce this final session devoted to the lessons learned from the crisis regarding the international financial architecture and the role of emerging markets in this new configuration. The strong and rapid transmission of the crisis from the United States to other industrialised countries, and subsequently to emerging countries, has clearly highlighted the contrast between: -  on the one hand, the heightened exposure of the international economic and financial system to the risk of systemic crisis, due to the increased interdependence between players of developed and emerging economies and financial systems. -  and, on the other hand, our crisis prevention and management instruments, which have proved to be largely inappropriate or insufficient. Therefore, in order to prevent a similar crisis from occurring in the future, these instruments must be strengthened. This entails a reform of the international financial architecture. The mechanisms and content of international cooperation must be reviewed with the aim of devising crisis prevention and management tools that better take account of the greater interdependencies between the economic and financial systems of advanced and emerging countries.

But corporate governance rose to prominence only in the last two decades, starting with the UK’s Cadbury Report in 1992. Since then, there has been a continuous stream of reforms in the UK to strengthen corporate governance, culminating in the UK Corporate Governance Code, which operates on a “comply or explain” principle. Corporate governance reforms in the US took a slightly different trajectory, leading to the Sarbanes-Oxley Act. Unlike the UK Code, Sarbanes-Oxley is enshrined in legislation and compliance is mandatory. 5. In Singapore, our corporate governance journey began in 2001, with the introduction of the Code of Corporate Governance. Since then, the Code has undergone two reviews to take into account changes in our corporate landscape as well as international developments. The most recent review was conducted by the private sector led Corporate Governance Council in 2010. MAS accepted all of the recommendations of the Council, with minor modifications, and issued a revised Code of Corporate Governance earlier this year. Key changes to the Code focused on strengthening Board independence, enhancing remuneration practices and disclosures, clarifying the Board’s responsibility in risk governance, and providing further guidance on companies’ engagement with shareholders. Going beyond the rules 6. Rules on corporate governance – mandatory or otherwise – have been considerably enhanced in most major jurisdictions. Yet, rules alone cannot assure us of high standards of practice. The recent financial crisis has exposed significant shortcomings in the governance of companies. We have seen monumental failures in risk management, a spate of accounting scandals and outright fraud.