It is however worth noting that quite aside from the crisis, recent episodes of compliance and market misconduct issues surrounding financial institutions have had very little to do with the crisis, but nevertheless have their roots in corporate governance problems. Poor governance allowed, and in some cases, likely encouraged, internal control failures leading to large-scale fraud, excessive risk-taking, market manipulations, and an endemic disregard for compliance with laws and regulations. While such issues have not plagued our domestic financial industry to nearly the same extent as they have in some other parts of the world, there are other reasons why we need to continue to pay close attention to corporate governance in Malaysia. For one, global economic and financial conditions have become considerably more uncertain. In the last Monetary Policy Statement, the Bank Negara Malaysia observed that economic activity is slower in most major advanced economies. There is considerable policy uncertainty in these economies, while conditions in the international financial markets continue to be volatile. In this environment, effective leadership reinforced by a robust framework within financial institutions for directing strategy and for regulating behaviour will be especially important. Domestically, the financial industry also faces greater competition as a result of the progressive liberalisation of the financial sector. Within the general insurance industry, the course has been set for greater price competition with the gradual removal of tariffs. A review of the operating cost controls which also regulate incentives for insurance sales is also in train.

And fourth, since 2014 the ECB has been implementing a quantitative easing programme entailing the large-scale purchase of private and public assets which, in its first two years of application, will reach an amount equivalent to 17% of total euro area GDP. At present the purchase of assets under this programme covers nearly the whole range of marketable securities eligible as collateral in Eurosystem operations: secured bonds issued by banks; securitisations whose underlying assets are loans to the non-financial private sector; public debt of the central and regional governments; supranational agencies and institutions; and, more recently, non-bank corporate bonds. Since April this year the ECB has been purchasing € billion per month of these securities and the total amount of the portfolio built up for monetary policy purposes now exceeds € trillion. I think it pertinent to add three additional comments on the measures set in train by the ECB: The first is that they are no different from those adopted by other large central banks. Thus, for example, the key policy rate is now also negative in countries like Japan, Sweden, Denmark and Switzerland. Also, asset purchase programmes and the strengthening of liquidity provision are instruments shared with other G7 central banks, while the publication of forward guidance also forms part of the Federal Reserve’s toolkit. The second comment relates to potential undesirable side effects which these non-standard policies may have on financial stability, such as the overvaluation of certain assets or downward pressure on banking sector profitability.