stressing that they themselves have the “ best and brightest ”, taken from high class universities all over the world. yet, the turmoil in financial markets spurs me to occasionally ask a board member of any of these institutions if they do not feel too big to be managed. the general reply is that simply because the “ best and brightest ” are part of the company, there is no further need to enhance the management structure, or even look into additional safeguards. it is these companies that tend to ignore that knowledge needs to be applied sensibly. if anything, it is exactly the current turmoil which stresses not to single - handedly focus on those among us that excel in their financial, theoretical skills, if this implies that we fail to open our eyes to external developments. developments such as risk management, corporate governance and social responsibility, all of which shape the way the financial system works on a day to day basis. “ our blindness with respect to randomness ”, as skilfully narrated by taleb in his black swan, clearly underlines this point. as all of us tend to have limited to no knowledge at all of unexpected events, the proposition “ we know ” is an illusion. science of risk management, for instance, adds knowledge, but does not uncover the full veil of the world and its events, which leaves us with knightian uncertainty. as such, the value of experts can also be questioned, if this implies that experts do not take empirical evidence into account, but base themselves merely on their own, by nature limited, expertise. what a globalized world requires is continuous education, discussion and peer to peer stimulation to keep up with the pace of exactly these unexpected events. fit and proper this emphasis on up - to - date financial knowledge is also reflected in our own focus on fit and proper requirements of financial institutions in the netherlands. starting at the top, knowledge and expertise at a board level is a prerequisite. the bank as supervisor has the task to monitor and uphold these. to ensure the proper discharge of their responsibilities, it is important that board members have the skills to run the company. they should have personal qualities such as honesty, diligence, independent - mindedness and fairness, in order to ensure that the company is run ethically, in compliance with relevant legislation and in a manner that treats its customers fairly. “ propriety ” requires that they are of good repute and integrity. “ fitness ” requires that a person appointed as a director

shyamala gopinath : financial markets – some regulatory issues and recent developments inaugural address by ms shyamala gopinath, deputy governor of the reserve bank of india, at the fixed income money markets and derivatives association – primary dealers association of india ( fimmda – pdai ) annual conference, mumbai, 4 january 2010. * * * 1. it is my pleasure to be here today again, at the fimmda – pdai annual conference as we enter into a new decade. the last decade in the indian financial sector has been a forward continuum marked by significant developments. it was in 1999 that guidelines for interest rate swaps and forward rate agreements were first introduced. 1999 was also the year when fema was enacted and since then it has been a process of measured opening up of the capital account. that was also the time when the laf framework for modulating short term liquidity was introduced and a plan was put in place for making uncollateralized call money market as a pure inter - bank market. looking back, we have come along a long way. one thing that perhaps connects through the regulatory approach during this period has been the pursuit of financial stability. some may be surprised to note that as far back as the start of this decade, the conceptualization of financial stability had been ingrained into the macro - economic and policy framework of the rbi. there was a stated focus on the need to treat financial stability as a dominant objective of macroeconomic management and as a necessary, if not the sufficient, condition for accelerating economic growth. 1 financial stability, of course, has acquired its rightful place as a key policy objective globally since the onset of crisis. 2. in my address last year, i had touched upon some of the burning issues that the global policy makers were grappling with. the financial markets have since stabilised and there is recovery in risk appetite but this primarily reflects the unprecedented and extraordinary policy measures taken by central banks and governments. public sector assumed the role of not only the lender but also the risk taker of last resort. much water has flown in the interregnum and in terms of outcomes, at the very least, we have a common minimum globally agreed program for repairing the financial system. the key elements of this program are : a strengthened capital adequacy and liquidity regime for banks, developing a framework for systemically important entities and resolution arrangements, extending the regulatory perimeter to unregulated pools of money