institutions fail. • second, clarity. we are committed to establishing clear expectations about what the future regulatory environment will look like. establishing stable expectations regarding the future regulatory environment will allow market participants to make forward strategic decisions with a greater degree of confidence. • third, while the direction is clear, changes will in cases be gradual. some elements of the reformed system ( such as higher capital ) will need to be phased in as conditions improve. • fourth, we must preserve the advantages of open and integrated global financial markets. given global markets and institutions but national regulatory rules and practices, we must strive for international consistency in standards of regulation to support a level playing field across jurisdictions. at the same time, if open global markets are to be preserved, these standards need to be strengthened to give adequate protections to “ innocent bystanders ” affected by the indiscriminate risk taking and retrenchment we have observed. • last, as we develop and apply more assertive regulation and supervision to contain excessive leverage and address market failures, we must resist imposing excessive, stifling levels of regulation. regulation must not prevent innovation, which is necessary if we are to improve product choices for consumers and an expanded access to credit. but we need to ensure that innovation does not compromise other clearly stated goals, including systemic stability and consumer protection. the challenge for regulators and market participants alike is, as always, to strike the right balance.

of conflicts of interest at credit rating agencies. we look forward to receiving your conclusions at our forthcoming fsb meeting. the above complements other important efforts to strengthen risk management practices and governance at banks and other financial institutions. the lessons of failures in these areas have been set out in reports and guidance by the senior supervisors group ( ssg ), the basel committee, by the iif and the counterparty risk management policy group. one area that politicians, the broad public and supervisory authorities will pay significant attention to is changes to compensation practices at financial institutions. the principles we have developed cover effective governance of compensation systems, effective alignment of compensation with prudent risk taking, and effective supervisory oversight and disclosure to and engagement by shareholders. they will be reinforced through supervisory examination and intervention at the national level, as well as by disclosure requirements ( on which iosco is working ). we expect national authorities and firms to implement material parts of the principles by end of 2009. there is a clear need for supervisors, regulators and other authorities to raise their own game, nationally and internationally. at both levels, authorities need to become more responsive to and more nimble and effective in mitigating emerging risks. information exchange and co - operation across authorities both nationally and internationally needs to improve. most countries are reviewing their national arrangements for collaboration amongst relevant national authorities. and at the international level, supervisory colleges have now been established for most global banks. the priority ahead is implementation. this is largely in national hands, but we need coherent approaches across countries and regions. indeed, the g20 leaders have placed a renewed emphasis on this. the fsb, the standard setting bodies and the imf / wb have been tasked with assessing implementation to serve three complementary aims : first, to foster greater adherence to international standards ; second, to help identify jurisdictions that lag behind in terms of their implementation of selected standards ; and third, to support peer review processes, such as those fsb members have committed to as an obligation of membership. * * * * * * i ’ d like to conclude with a number of principles that guide our actions as we pursue our reform agenda : • first, the guiding principles behind our work is to recreate a financial system that operates with less leverage, is more immune to the set of misaligned incentives at the root of this crisis, where transparency allows better identification and management of risks, where prudential and regulatory oversight is strengthened, and the system is able to let mismanaged