andreas dombret : international coordination to enforce regulatory reform speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the salzburg global seminar “ financial regulation – bridging global differences ”, salzburg, 16 august 2012. * 1. * * introduction ladies and gentlemen, to cut to the chase : international collaboration between regulators has never been so challenging – and yet never has collaboration been so important. let me explain. 2. financial sector reform – time to slow down? the regulatory community is currently facing enormous pressures. the sovereign debt crisis has given a fresh impetus to calls to water down or delay regulatory reform. some argue that the ongoing uncertainty in financial markets and the weak global economy are good reasons to ease up on regulatory pressure. they say the financial sector is being asked to do too much too soon, and regulators should slow the speed of adjustment. yet i see it as more a case of “ too little, too late ” : if there is a reproach to be made, it is that regulatory progress has not been faster. the sovereign debt crisis, which is not least driven by systemic problems in some countries ’ banking systems, underscores the urgent need to make the financial system more resilient. relying on financial markets ’ self - regulation will not do, i am afraid. we must deliver on our promise and extend regulation and oversight to all systemically important financial institutions, instruments and markets. to deliver this promise, close international collaboration is essential. given the truly global financial system, “ going it alone ” is no longer a viable option. it will only lead to the migration of business and to regulatory arbitrage, undermining not only the integrity, efficiency and orderly functioning of financial markets, but ultimately undermining financial stability. 3. international consistency versus one - size - fits - all the crisis has clearly demonstrated that countries cannot successfully regulate their financial markets and firms in isolation. capital flows do not stop at geographical borders ; quite a number of financial institutions operate globally. therefore, an internationally coordinated regulatory response is imperative. to be successful, reforms must be implemented at least at the major financial centres. international cooperation is not an end in itself, however. instead, i suggest to measure its value by the extent to which it provides financial stability. while adopting a robust, common set of rules is essential, it is neither practical nor desirable to fine - tune all details of financial regulation internationally. as the characteristics of each country

, which are experiencing current deficit deepening and strong pressures on their currencies. this contagion mechanism, through which the crisis ignited in most advanced economies of the world is spreading worldwide, has made albanian economy feel the effects. even though the financial system was not influenced by the world financial crisis, second - round effects are being reflected and will be reflected even in the future. the bank of albania has assessed that, driven also by a large global market “ drought ”, 2008 has recorded reduced foreign currency inflows and increased current deficit. during two last months a moderate foreign exchange rate depreciation was noted. however, we should take into account that albania is in a more favourable position than other economies of the central and eastern europe. our advantage stands on the fact that unlike other countries of the region, we have not financed our current and trade deficits with shortterm foreign capital inflows, otherwise referred to as “ hot money ”. the bank of albania has prohibited lending to the economy with the so - called “ exotic currency ”, which once upon a time represented funds of a very low cost, ready to penetrate even to our economy. let me remind you that many developing economies have fallen into the trap of those funds, suffering now gravely from their flight. furthermore, we have adopted a flexible exchange rate, unlike fixed or managed exchange rates. the bank of albania has assessed that current developments, particularly those of our main partners, will bring about tendencies which are generally different from those with which we have been working over last ten years. actually, the euro area is in crisis. economic growth is negative ; the euro is loosing terrain versus the dollar ; unemployment is increasing ; and prices are going down. important industries, such as the financial industry or that of machineries are undergoing the worst situation over 50 recent years and governments of these countries are obliged to approve aid packages, to guarantee their survival. according to the most optimistic assessment, this situation will not be improved, at least until the end of this year. therefore, i emphasise that exporters should adopt new philosophies. they should be innovators, increase products and discover new markets, beyond the traditional ones, which have currently been hit from the economic and financial crisis. global developments impose adoption of new approaches. the country ’ s economic and financial development stage and passing into the group of the developing countries have created conditions for businesses in general and export industries in particular to adopt new standards in business