through self imposed regulation or self discipline. how can a bank change the incentive structure underlying its remuneration scheme if the others are not and – more importantly – if unregulated institutions like hedge funds are cannibalising them? how can boards improve their knowledge of what management is doing if they have little understanding of the complexity of financial instruments? there is clearly a coordination problem, i. e. a role for public policy. financial institutions would generally oppose constraints that reduce their profitability, but would ultimately accept them if the constraints are imposed on all. the bottom line is my starting line. the main problem with financial markets comes from conflicts of interest, at all levels. the problem with conflicts of interest is that those that are affected by them do not recognise them, sometimes not even in private ( i myself as a central banker might not be immune from this sense of denial ). experience has shown that self discipline and self regulation are not sufficient. there must be constraints and obligations, not only for individuals but also for institutions. if we really want to overhaul the financial system so that it can face the challenges of the future, we have to recognise this and act accordingly. in a global financial system, such an action requires a strong european initiative.

delisle worrell : competing in the global market of research welcome remarks by dr delisle worrell, governor of the central bank of barbados, at the central bank of barbados 35th annual review seminar, hastings, christ church, 27 july 2015. * * * the central bank of barbados can be proud of its research achievements over the forty plus years of its existence. we have a rich trove of economic data and analysis that we have accumulated over those years, most of which is available for download from the internet, from our own website among others. thanks to this research we understand better how our economy works, and how the economy has evolved over time. understanding the economy is the key to the formulation of good economic policy, and for public involvement in the execution of the economic strategy. this is a vitally important activity, because our economy does not behave in the same way as the us or uk economies, or the economy of any large country whose currency is widely used around the globe. our economic policies do not work well if they are modelled on those of large industrialised countries, countries that provided the context for the development of the economic models and policies that comprise the conventional policy suite reflected in the reports of the imf, world bank and other international institutions. we are by no means alone among developing and emerging market economies in recognising that the conventional policy dictate does not improve the condition of our economies. however, we are among the very few that have an alternative diagnosis and prescription for curing our economic ailments. the key to our diagnosis is the explicit recognition that size matters for economic adjustment and growth. small countries do not have the possibilities that large countries have of producing at home to substitute for imported goods to any meaningful extent, nor can they diversify their exports beyond a narrow compass. the reason is obvious to anyone who lives in a very small country : with limited resources and skills the country must of necessity concentrate on getting production of a limited range of products and services up to international standards of competitiveness. precisely because they are small producers in a global market, only those products and services that are competitive internationally will survive. except for purely domestic production such as construction and personal care, anything that is not internationally competitive will be driven from the market, either through formal channels, or – if prohibitive barriers to international trade are erected – via informal markets. the reality of a limited range of production of anything that can be traded, in comparison with the very