arrangements. fortunately, it left no systemic impact in other market segments. but, we may not be so lucky next time and, therefore, i would exhort all banks to look at the need to have an effective bcm as more than a mere technology issue, although technology may be the most important component in the arrangements. i had earlier mentioned about the need for taking care of a few cs. i shall add one more c to this. this pertains to clarity. there are many challenges ( yet another c which can be overcome ) in respect of appropriateness of the it model for each bank. more often than not, it provides solutions for business and not the other way around. with the stabilisation of cbs, it is now the optimal time for business to commence their process of demanding from it. and once the clarity of requirements is established, the choice ( one more c ) of the correct ( c again! ) it solution would be smooth. to this end, we need to re - orient our efforts so that it systems are our slaves and not vice - versa. finally, in banking, it is imperative to create income efficiencies, technology - driven efficiencies and service efficiencies to reduce cost structures. as technology matures and improves, so will the skills, processes, and bottom lines. and once the banks get it right, they will get much more for far less. i wish the workshop all success. bis central bankers ’ speeches

year ’ s crisis did not come as a surprise. in june 2007, in a speech at the central bank of argentina, i myself expressed concern that the risk of a broader shock, resulting from a widespread decline in the appetite for risk, had increased. i warned that if the initial price movements were to trigger counterparty concerns, this might easily generate deeper and more broad - based liquidity erosions, posing systemic risks. 12 other central banks and international institutions had issued analogous warnings, some of them even earlier. 13 why do markets trust central banks on monetary policy, while they seem to ignore the signals provided repeatedly by monetary authorities on financial stability? one possibility, of course, strictly related to human psychology, is that after a protracted period of favourable macroeconomic conditions investors may become over - optimistic and underestimate risks. but it is equally possible that, as in monetary policy - making, here too effective communication requires words to be followed by deeds. this objective may necessitate wideranging changes in regulations, supervisory practices and central bank responsibilities. the turmoil has shown that international coordination is essential to make private institutions more transparent and avoid the potentially destabilizing effects of the perverse incentives that prevail in some segments of the financial system. as for central banks, it has been maintained that if they are to be as credible when they comment on financial risks as they are in monetary policy, they need to be more closely involved in the task of ensuring financial stability ; in some cases this may mean reinforcing their statutory responsibilities. 14 we should also assess carefully whether the instruments currently available to central banks to preserve financial stability – for example by attenuating the pro - cyclical nature of financial markets – are adequate to this formidable task ; and whether it might be possible to overcome economic and political resistance to the idea of enlarging the central banks ’ role in defending financial stability. but preserving financial stability may also have implications for the conduct of monetary policy. indeed, the link between monetary policy and financial stability poses a challenge to central bankers. we must seriously reconsider what was until recently a widely held view, namely that monetary policy should play a passive role as financial imbalances are building up and should only intervene after the crash, injecting liquidity to avoid a macroeconomic meltdown ( known as mopping up after the event ). we should assess whether and how far our policy instruments should also be used to “ lean against the wind ” to contain