houses has followed a similar trend in particular in the united states. finally, the cost of corporate borrowing in excess of a riskless rate, which remunerates credit risk, had also decreased significantly in both economies. obviously, we observed the same movements across all markets. facts common to multiple markets suggest the existence of a common factor : one of these common factors, i will argue, was the lack of sufficient medium - term orientation of global macro policies. a second measurable macro development on the quantity side is the accumulation of “ global imbalances ”. the expression “ global imbalances ” refers to saving - investment imbalances within – and external imbalances among – a number of systemically relevant countries, which were unsustainable over a medium - to long - term perspective. conceptually, it is helpful to separate the drivers of global imbalances into structural and cyclical components. 3 structural issues have been at play in the development of imbalances in advanced economies. while main distortions were to find at the micro level, they had important macroeconomic implications. as argued before, insufficient oversight of financial markets in advanced economies, which ultimately allowed for the originate - and - distribute banking model to develop, led to a separation of those holding credit risks from those monitoring and managing them. the resulting excessive focus on near - term returns led to a misjudgement of the underlying risk, and created wrong incentives for originators. such an environment created the conditions for the observed herding behaviour, in which risk control easily became a secondary issue. at the same time, rapid financial innovation and the emergence of new, non - standardised structural products made the risk assessment difficult for rating agencies, leading to considerable underpricing of the embedded unit of risk and to biased expectations about the evolution of asset wealth. ultimately, at the macro level, this system led to an inefficient allocation of capital and resulted in very low savings rates in some systematically important advanced economies. structural factors have dominated the emergence of excess savings in emerging asia. the latter happened in a context of quickly rising incomes, growing productivity and commodity prices in emerging economies, and was partly attributable to structural factors such as : • the propensity of residents to accumulate precautionary savings due to lacking welfare provisions ; and • relative financial underdevelopment. recent studies show 4 that the lower degree of financial development in emerging economies, compared with mature economies, has been

paul a acquah : financial fraud speech by dr paul a acquah, governor of the bank of ghana, at the opening of a seminar on financial fraud investigation for police and bank investigators, held at police headquarters, accra, 18 - 19 may 2006. * * * mr. chairman, honourable minister of justice and attorney general, inspector general of police ( igp ) and deputy igp, director general, criminal investigations department, managing directors of banks, representative of association of bankers, senior police officers and officers, members of the press corps, distinguished ladies and gentlemen! i am grateful to the police administration and the organisers of this very important seminar for inviting me to deliver a speech this morning. given the importance of the topic, namely financial fraud investigation, i could not resist the invitation, in spite of the short notice. the topic, the participants and the timing, all are of interest to the bank of ghana ( bog ), so far as this event is concerned. it is in this regard that i have to congratulate the organisers and the participants for making this event happen. mr. chairman, what can i say? i have been requested to deliver a speech without a topic. this gives me the opportunity to talk about anything that will be of interest in this forum. i have therefore decided to make some general remarks on the topic. admittedly, the phenomenon of financial fraud which manifests itself in various ways has been confronting nations and the international community from time immemorial. unfortunately, its form and scope keep changing and expanding with time and with advances in technology. what at all is that phenomenon christened “ financial fraud ”? what are its effects? how can its negative impact be controlled or reduced? who should be responsible for dealing with the problem? mr. chairman, take the case of bank fraud. bank fraud has been legally defined as “ the criminal offence of knowingly executing, or attempting to execute a scheme or artifice to defraud a financial institution, or to obtain property owned by or under the control of a financial institution by means of false or fraudulent pretenses ”. bank frauds are perpetrated by insiders or outsiders to the bank or by way of a collusion between them. their acts take the form of embezzlement, misappropriation of funds, aiding and abetting, making false entries in books or statements making false statements in credit applications, money laundering and other fraudulent practices. mr.