important that an appropriate level of disclosure requirements be included in pillar 1 to facilitate such market discipline. the pillar 3 disclosure recommendations themselves are very far reaching. but at this point many of them are recommendations, not requirements. in addition, we recognize that we still have more work to do in fashioning a more disciplined and prioritized set of disclosure requirements, one that balances the cost of compliance against the benefits of disclosure. this, too, is an area in which bank comments would be particularly helpful. does the new proposal maintain competitive equity around the world or provide competitive advantage to some countries relative to others? obviously, this is a sensitive issue. all parties to the negotiations want a standard that promotes safety and soundness and deters systemic risk. within these boundaries, though, we also view the world from our own perspective. as countries negotiate, supervisors appropriately seek to avoid rules that would disadvantage their own banks. hopefully, we hope that we will ultimately reach an agreement that is acceptable to us all. but, it is crucial that banks, in their own self - interest, review the proposals carefully, identify potential problem areas, and alert supervisors of material concerns. did we set relative and absolute required capital levels about right, and did we properly balance the incentives to move to more sophisticated options? i would be surprised if anyone could, at this point, provide a definitive answer to these questions, although they are central to the success of the proposal. part of the problem, of course, is that many gaps remain in the current proposal, making it impossible for banks to compute the amount of capital they would have to hold under the irb approaches. there is, as a result, an interactive process at work. we need comments on what we have already proposed, including feedback on the implications for banks'capital levels. we will continue to work to fill in the gaps and, when this work is completed, will need further feedback about the effects of the overall proposal on required capital levels. i hope the banking industry can provide detailed and constructive feedback on the proposed structure of risk weights, especially for those portfolios that have been explicitly addressed under the proposed framework – primarily corporates, banks, sovereigns, and retail under the irb. are the proposed relationships reasonable between a loan's risk weight and its default probabilities, loss given default, exposure, and other inputs to the irb approach? as i suggested earlier, if we do not get relative risk weights about right, it will

daniel mminele : ethics in finance and financial markets address by mr daniel mminele, deputy governor of the south african reserve bank, to the south african chapter of aci – the financial markets association, johannesburg, 28 october 2014. * * * introduction good evening ladies and gentlemen. thank you to aci and standard bank for the honour and privilege to address you tonight, for creating an opportunity for us to exchange views, and for aci members to cultivate their networks of contacts in the industry. as the aci will be celebrating its sixtieth anniversary next year, it would only be proper to recall some of its important contributions to building a culture of professionalism and best practice in financial markets, especially the foreign exchange market. as you know, the aci has over the years taken a leading role in not only bringing finance professionals together to seek ways of addressing the more pressing issues of the day, but also in enhancing the professionalism of its members, assisting in building - up of competence via its training programmes and examinations, and quite importantly, striving for high standards of ethical conduct in the industry. and it is on this latter point that i would like to share some thoughts and impressions today. ethics in finance and financial markets has perhaps never been as relevant as it is today, and for that reason, it may not be so much of a surprise that the international monetary fund, at its conference on the future of finance during the annual meetings earlier this month, scheduled as its first session a two - hour panel discussion on the subject of ethics and finance. the importance of ethics for a sound financial environment i do not need to highlight to an audience such as this one the importance of ethical behaviour in financial markets, not just from a moral point of view, but equally from a point of view of economic efficiency. in an industry where the conclusion and enforcement of contracts is based on trust – trust from the provider of capital that he is fairly rewarded for the risk of potentially losing some of his assets ; trust from the borrower that he is charged a fair price for his access to capital – any breakdown in that confidence can quickly lead to incorrect pricing and in turn, improper allocation of resources. lack of confidence in the financial system in general typically means rising counterparty risks, and prompts lenders of capital to require a higher risk premium in their investment returns, raising the overall cost of capital in the economy. in similar fashion, fears that some participants in financial transactions may prove