The lessons we learnt imply that leaders must recognise and align their priorities to steer their respective institutions to contribute more broadly and strategically to economic development. This will include playing a more active role in technical assistance, and serving as key repositories of specialist knowledge, resource aggregators for strategic development projects and credible advisers to the Government. These ‘additionalities’ are important ingredients in ensuring the effectiveness of development financial institutions. Strengthen accountability frameworks through performance standards that emphasise development additionalities While the notion of additionalities is not new, their link to how the development institutions are managed and governed remains generally weak. As a result, their important contributions are often not translated into tangible outcomes that are seen and felt by the stakeholders and the public at large. This leads me to my second point. Traditionally the achievements of development institutions have always been measured predominantly by the volume of financing provided to the targeted sectors. There are several reasons for this. Non-financial development additionalities are harder to quantify the cause and effects are also not always clear. As such, more effort and investments are required to collect the data for measuring socio-economic and development outcomes that are associated with such programmes. However, this must not hold back efforts for us to do better. They are a major channel for directing development, both at an international and domestic level. It is therefore, imperative that there is confidence in the effective and efficient use of funding aid to achieve the intended development goals.

In connection with this, a number of provisions of a compulsory nature were introduced to prevent the possibility of the state being placed in a blackmail situation. For instance, an act was introduced that meant in principle that the Swedish Bank Support Authority could make decisions in the bank through a state compulsory purchase of the shares if the bank’s capital adequacy fell below two per cent. But these temporary provisions, like the general bank guarantee, ceased to apply in 1996. The Bank Support Authority was transformed into the Deposit Guarantee Board, which was given the task of managing the deposit guarantee and investor protection. Since then it is in principle only the general regulations for competition and liquidation and the system for the deposit guarantee that are available for managing institutions with problems. Unfortunately it is not particularly appropriate – if even possible – to apply the general competition regulations to banks. The regulations on competition and liquidity are primarily to protect the interests of the creditors. They are not particularly well-adapted to take into account society’s interest in maintaining the stability of the financial system. The primary task of a receiver in a bankruptcy is to safeguard the interests of the creditors. He or she has neither the authority nor can be expected to have the skills required to take the measures needed to safeguard the stability of the financial system. Problems which threaten stability require immediate action. Bankruptcies usually take years to resolve.