In the rest of my remarks I should like to comment briefly on the evolving international consensus on the approach to maintaining financial stability. The 1994 Madrid Declaration, to which I referred earlier, had already welcomed "the growing trend towards currency convertibility and encouraged IMF member countries to remove impediments to the free flow of capital." One might have supposed that the subsequent eruption of the Asian financial crisis – which was certainly aggravated, if not provoked, by volatile international capital flows – might have resulted in something of a reaction to further evolution in that direction. In fact, in the midst of the turmoil, in September 1997, the IMF's Interim Committee confirmed the consensus view that: "Private capital flows have become much more important to the international monetary system, and an increasingly open and liberal system has proved to be highly beneficial to the world economy. By facilitating the flow of savings to their most productive uses, capital movements increase investment, growth, and prosperity." In other words, while markets may not be perfect, they are in general the best means we have of allocating financial resources efficiently. The impact of the crisis was instead to give fresh impetus to defining and establishing the conditions that are necessary for financial markets to function more efficiently, and that would help to reduce the risks of and limit the damage from, volatile  4  BIS Review 36/2001  shifts in market sentiment, with their potentially disruptive effect on both economic and financial stability.

Additionally, in a highly interconnected global economy with greater international financial inter linkages, financial turmoil and stress in national financial systems will have ramifications that transcend borders. Given the high stakes involved, there has been increasing scrutiny of the values, professional norms, educational standards and incentives that drive and shape the behaviour of financial institutions. Much of this scrutiny has aimed at reinforcing the responsibility that financial institutions have to the broader society. The establishment of the Financial Services Professional Board (FSPB), thus marks a significant development towards achieving the highest standards of professional conduct including fair business dealings and ethics in the financial services industry that will be consistent with the long-term growth, stability and integrity of the financial system. It is envisaged that the Financial Services Professional Board will act as an industry-led independent board that will drive the development as well as the advocacy of professional standards, ethics and continuous professional development across the financial services industry. Central to this aim is the development of a culture within the financial services industry which places an unequivocal commitment to professionalism and ethics. In advancing this endeavour, the FSPB will promote, advocate and facilitate the identification, development and the adoption of professional and ethical standards across all sectors of the financial services industry. The primary purpose of such standards will be to clearly define the expected level of performance and ethical conduct that financial services professionals are required to achieve in the service of the public.