Ravi Menon: A new financial landscape – rebalancing on three fronts Opening address by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the Inaugural Sim Kee Boon Institute Annual Conference on Financial Economics, Singapore, 5 May 2011. *  *  *  Introduction Professor De Meyer, distinguished speakers, ladies and gentlemen, good morning. 1. The crisis of 2008–2009 has triggered a fundamental shift in the global financial landscape. A new balance is emerging, as market participants and financial authorities learn the lessons of the crisis and revisit existing paradigms. While the contours of this new landscape are still forming, a significant rebalancing is taking place along three dimensions on the regulatory front: 2. First, there is a redefinition of the respective roles of the market and regulation. 3. Second, there is increasing attention on realigning macroeconomic stability and prudential supervision. 4. Third, as regulatory reform efforts gather pace, there is a growing need to reconcile international standards with domestic discretion. Redefining the role of markets and regulation 5. Let me begin with the relationship between markets and regulation. Stability is fundamental to a well-functioning financial system. But this stability does not occur naturally. The idea that self-regulation and market discipline are sufficient to ensure stable financial systems has come under heavy fire in the aftermath of the crisis. Financial markets differ from other markets in two important ways. 6. First, financial markets do not always self-correct. In fact, their propensity for leverage makes them prone to volatility and excess.

In the West Africa sub-region, the principal sources of money laundering are from the illegal exploitation of natural resources especially in mining, and to a large extent the proceeds from corruption. Concern over Money Laundering is growing because of its perverse effects on the socioeconomic environment and its close links with organized crime. Armed with the immense financial resources at their disposal, money launderers can compromise persons and institutions to acquire economic, social and political power. The ten-year rebel war that officially ended in 2002 sadly illustrates the threat and problem that Money Laundering poses to emerging economies like Sierra Leone’s. The AFRC and RUF using a network of criminal gun running organizations to finance their activities completely destabilized our nation politically, socially and economically. Diamonds obtained by forced labour from the nation’s diamond fields (blood diamonds) played a significant role in fuelling the rebel war. Although the war ended in 2002, the environment wherein criminals can launder their ill-gotten fortunes still prevails today because Sierra Leone is characterized by the following socioeconomic features:•  A large and porous border that gives ample opportunities to criminals who can sneak in and out undetected. •  A large informal sector which is extremely difficult, if not impossible to regulate. •  The preponderance of cash in the payment system due to low level of development and outreach of the financial system. •  Corruption. •  The presence of valuable minerals (gold and diamonds), which are easy to smuggle.